Impairment Charge Damps ValueClick’s Earnings

ValueClick Inc. generated $625.8 million during 2008, up from the $616.5 million it pulled in during 2007. But the online advertising firm took a net loss of $214.1 million in 2008, largely due to a $322 million impairment of goodwill charge. During 2007, it recorded $70.6 million in net income.

With its operating units, the Media segment, which includes display advertising, lead generation marketing and e-commerce, generated #01.3 million, down from $366.3 million. Operating income from the unit was $73.2 million, down from $86.8 million.

While ValueClick pulled in a little more revenue from its Affiliate Marketing segment — $122 million in 2008, up from $116 million – income didn’t follow suit. Affilliate Marketing’s segment income dropped from $63.2 million in 2007 to $59.5 million.

Comparison Shopping and Search raked in $177.1 million, up from $112.7 million a year earlier. But much of this growth was the result of a full year’s contribution from MeziMedia, a search, shopping and content web sites operator, in July 2007. Operating income from the segment rose from $22.5 million to $40.9 million in 2008.

Within ValueClick’s Technology Segment, revenue rose from $23.7 million to $28.7 million, while segment income increased from $10.5 million to $13.6 million.

In 2007, ValueClick derived 60% of its revenue from its “Media” operations. In 2008, this dropped to 48% — in large part due to the MeziMedia acquisition, which increased Comparison Shopping and Search’s importance.

The Analyst’s Take: Give ValueClick credit for focusing its online display advertising efforts. In 2007, its display advertising operations worked with 16,000 sites in the U.S., and 21,000 worldwide. That year, these sites served up advertising to 134 million unique visitors. In 2008, the number of U.S. sites dropped to 15,000, reducing the number of worldwide sites to 20,000 – but the number of unique visitors rose to 159 million. It’s doing this with fewer domestic employees – 739 at the end of 2008, compared with 922 a year earlier – and a few more international ones (450, up from 422 in 2007).

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