By Staff Report Thursday, May 3rd, 2012

Shares of online advertising firm ValueClick plunged 22.2 percent after the Westlake Village-based firm projected lower-than-expected second-quarter revenues of between $155 million and $160 million.

One analyst told Bloomberg News that the company is reducing traffic in its owned-and-operated website segment.

ValueClick reported first-quarter profits of $21.6 million – 27.8 percent above the same quarter last year – but investors were upset by its second-quarter outlook and drove the company’s share price down 28 percent in morning trading on May 3. Analysts in a Bloomberg survey had on average been looking for a second-quarter revenue outlook of $167.9 million.

ValueClick’s first-quarter revenue climbed 31 percent to $152.9 million. “This was an important quarter for ValueClick, as we executed on many of our strategic initiatives, including expanding the Greystripe mobile business into Europe [and] accelerating the integrated-sales approach among our divisions,” CEO James Zarley said in an earnings release. The company is “just scratching the surface of providing a broader range of services to our clients as we execute on our vision of becoming the leading digital marketing services partner for major advertisers,” he said.

Even so, the the company’s Owned & Operated business, which includes the financial website Investopedia.com, is winding down other properties in that unit because they’re less profitable than others, Carter Malloy, an analyst with Stephens Inc. Arkansas, told Bloomberg.

“The O&O business has some great owned-content sites in it — i.e. Investopedia.com.,” Malloy said in an email to Bloomberg. Other smaller sites “can create unnecessary volatility in revenue.”
But, he said he’s “surprised” by investor reaction to the earnings report and that ValueClick’s fundamentals haven’t changed. Malloy has a “hold” rating on the stock.

“Management is executing against the plan and the stock seems undervalued.”