ValueClick Shares Slide Even After Google/YouTube Run Up

3:03 pm   -   October 11th, 2006

Article discusssing the impact of the Google purchase of YouTube and how it affected other Internet company stocks, from the Houston Chronicle Online.

On the losing side, shares of online marketing services company ValueClick opened down Tuesday, after an analyst downgraded the stock on concerns that Google Inc. will ramp up competing operations in 2007.

RBC Capital Markets analyst Jordan Rohan wrote in a note to investors that Google recently discussed moves that could threaten ValueClick’s display ad sales and lead generation businesses.

Rohan wrote that Google plans to offer large commissions for European ad agencies who buy its display advertising inventory. While the offer is limited to businesses in Europe, Google’s “desire to push into the resale of display advertising threatens ValueClick, at the margin,” Rohan wrote.

He also added that Google has been nosing around about “cost-per-action” products, whereby Google would sell advertising based on the number of people who go to an advertiser site and create an account or make a purchase, rather than against the common “cost-per-click” metric.

“This may pressure the WebClients and Commission Junction units of ValueClick,” Rohan wrote. The analyst dropped his rating on the stock to “Sector Perform” from “Outperform” and lowered his price target to $23 from $20.

ValueClick shares fell 35 cents to $17.67 on the Nasdaq.

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