DoubleClick Jumps 15 Percent But Sale Considered Difficult

NEW YORK – Shares in DoubleClick Inc. (DCLK) surged nearly 15 percent on Monday as the Internet marketing company weighs putting itself up for sale, but analysts said a deal could be difficult because of its business structure.

DoubleClick, with a market capitalization of more than $900 million, will need to court two groups of buyers for its poorly performing Internet ad-management segment and its more traditional Abacus database marketing division (search), which accounts for one-third of revenue and has seen steady growth, analysts said.

"I'm skeptical that there's an easy sale here," Mark Mahaney, analyst at American Technology Research, said. "Give it a week or two, and if there's no follow-up, these shares could easily be back in the mid $6 (range)."

A source close to the company said DoubleClick was open to all alternatives,including the sale of specific operations.

Potential buyers for the Abacus business could be marketing companies such as Acxiom (search) or Alliance Data Systems (PCX), while rivals in the online advertising space such as aQuantive (search) or ValueClick (search) could be interested in the ad-serving operations, analysts said.

New York-based DoubleClick late on Sunday said it hired Lazard Freres & Co. to explore a sale as well as a recapitalization, spinoff, share repurchase, or extraordinary dividend, just days after the company warned it would miss fourth-quarter earnings expectations.

DoubleClick officials were not immediately available for further comment.

The company, whose technology helps advertisers serve and manage online campaigns, has given such warnings for three consecutive quarters as its fails to capitalize on a surge in Internet ad spending. DoubleClick shares dropped 8 percent on its latest outlook at the end of last week.

While advertisers are spending up to 30 percent more on the Web this year toreach consumers, the bulk of growth benefited search engines such as Google , popular Internet sites that sell ad space such as Yahoo or agencies that build campaigns rather than the technology firms that serve ads.

"They have had premium pricing for their ad-serving business, and that pricing has been under pressure for one or two years," said American Technology's Mahaney. "They are in a commodity-like business."

Formed in 1995 to sell advertising in the early days of the Internet, DoubleClick became a stock market darling during the Web boom and by 2000 boasted a share price of more than $100. But as online advertising dried up withthe dot-com bust, the company was forced to lay of staff and shed assets.

DoubleClick shares gained 80 cents to $7.16 on the Nasdaq in afternoon trading, after trading as high as $7.32 in the session. Rival ValueClick rose 20cents, or 2.2 percent, to $9.49 while aQuantive stock slipped 6 cents, to $8.89.