Stock of the Day
|
aQuantive Inc. (AQNT)
aQuantive Posts Big Earnings, Higher Estimates
If you love the internet, aQuantive loves you. The Seattle-based company provides digital marketing solutions to businesses, including digital marketing management software, web advertising, e-mail prospecting and search engine optimization. With the increasing prominence and importance of web-based advertising, companies brokering and managing these activities will not only see increased business, but increased competition. How does the company plan on keeping up with the Joneses in an industry potentially rife with, well, more and more Joneses?
|
| Daily Chart |
If you are not able to see the chart, your email client probably does not support javascript. To view it, please click here
|
| Stock Analysis |
There certainly is risk in the internet advertising industry. aQuantive purchases blocks of advertising space from search engines, resulting in lost revenues if the company is unable to convince enough businesses to advertise on these sites. As more and more companies turn to the internet to supplement their advertising campaigns, increased demand can raise the amount that aQuantive would have to pay to buy up blocks of advertising. At the same time, competitors will try to snatch up advertising blocks as well, which cuts down on available supplies. Essentially, the overall effect could be a price squeeze from all sides.
|
At this point the company has a couple of choices. It could let its profits erode as its costs increase, but self-punishing behavior should only be undertaken if competitors refuse to increase their prices. Second, it could mitigate the increase in prices by transferring costs to the consumer. Third, it could buy out competitors, which tends to be a relatively expensive endeavor. While aQuantive has made acquisitions in the past (Go Toast LLC in 2003, NetConversions, Inc and SBI.Razorfish in 2004), it certainly is not looking at many comparable competitors to have to deal with. With a market value of $1.35bn, aQuantive's only competitor with similar figures is Earthlink (ELNK: Charts, News, Offers). While Earthlink does have much higher revenues, it is not growing at the same rate as aQuantive (13.5% annualized), it has lower net profit margins and total returns over the last three years.
|
All of the great financial news should be taken worth a grain of salt. The internet is a very competitive industry, and the weather can change very quickly from a company that does not try to innovate. So far, aQuantive has been doing a good job at staying abreast of new trends. Since 2001, it has posted a gain of 460%. Compare this to Earthlink's 46% since 2001 and Provide Commerce's (PRVD: Charts, News, Offers) 60% since 2004. The company just posted earnings of $.13 a share, beating out expectations of $.10. The figure also topped the same period from last year, which saw $.05. This stock is certainly worth looking into more, especially in such a growing industry.
|
Profile |
aQuantive, Inc. operates as a digital marketing services and technology company in the United States. The company operates in three segments: Digital Marketing Services, Digital Marketing Technologies, and Digital Performance Media. The Digital Marketing Service segment provides Web advertising, Web site development, email services, strategic portal relationships, affiliate programs, customer targeting, analytical services, search engine marketing, and creative services. The Digital Marketing Technologies offers a digital marketing management system to manage digital marketing programs and Web site effectiveness. The Digital Performance Media serves as a liaison between online publishers and advertisers by buying blocks of online ad inventory from publishers and reselling the inventory to advertisers. The company was founded in 1997. aQuantive was formerly known as Avenue A, Inc. The company is headquartered in Seattle, Washington.
|
|
|
|
|
