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DoubleClick defends results
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April 23, 1998: 6:45 p.m. ET
CEO Kevin O'Connor tells CNNfn he's untroubled by latest quarterly loss
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NEW YORK (CNNfn) - Even for hot Internet media company DoubleClick, the Web can prove a tough place to do business.
After the Dow's close on Wednesday, the company announced first-quarter losses of $4.4 million - nearly quadruple its $1.2 million loss a year ago. The drop came even as revenues rose to $13 million from $5.3 million a year ago.
DoubleClick's chief executive officer, Kevin O'Connor, spoke with "Business Day" anchors Deborah Manchini and John Metaxas about the company's results and its plans from here. Excerpts of his comments follow:
JOHN METAXAS, CNNfn ANCHOR: Your revenue's up, and yet you did not make money in the quarter; you lost money. When are you going to be profitable?
O'CONNOR: Well, what we're focused on today is to invest. It's one of the fastest growing mediums and what's most important today is to keep providing, keep trading solutions -- new solutions -- for advertisers and publishers, and expand worldwide. So, what's most important is what analysts projected. We did what we said we were going to do and we met our goals. In fact, exceeded our goals -- our revenue goals. So, that was key.
DEBORAH MARCHINI, CNNfn ANCHOR: It is tough for investors to understand, though, because you reported really good revenue growth. Your sales more than doubled, yet your losses nearly tripled from a year ago.
O'CONNOR: Yes, that means we're investing. You know, this is the biggest trend that's ever hit the world.
MARCHINI: What do you have to invest in, though? I'm curious as somebody with maybe a limited knowledge of the software business. You make your money by telling advertisers who see[s] their advertising on the Net. Where's the investment come in?
O'CONNOR: It's two-fold. One, this is becoming very sophisticated technology. Today we are delivering almost 2 billion ads every single month dynamically. This isn't like TV or print where everything's static. On the Internet, everything's dynamic. … We are making a huge investment in the technology. We are building a very distributed network all over the world. Second-fold, what we're really investing in is our sales distribution. We have hired a tremendous number of sales people all over the world to call on both advertisers and publishers.
METAXAS: Can you comment for a moment about Wall Street's fascination with your company and the other Internet stocks? Your stock is up more than 100 percent in just two months since your IPO and yet you're not yet profitable. Are these valuations for the Internet stocks justified?
O'CONNOR: I can't answer that question. I mean, all we can really do is stay focused on our business.
METAXAS: Well, for your side?
O'CONNOR: That's my job. You know, well, all we can do as a company is really stay focused on delivering solutions. . . . I mean, I can tell you why I think investors really like the Internet and I think it's because -- I know it's because this is the fastest growing medium of all time. We've had 50 million users in under five years - (it) took TV, I believe, 18 years to hit that. I mean, this is the fastest medium. People are spending more time on the Web. It's a faster growing trend than PCs or networking. So, I think what's happening is people are looking for the leaders in the categories. People see DoubleClick as a leader in the networking category, and they like leaders.
MARCHINI: Does advertising on the Web work?
O'CONNOR: It works for most people. Some people haven't quite figured it out yet. But yes, it is by far the most measurable, targeted medium in history.
METAXAS: You're taking several approaches to advertising. Are you convinced that the standard has been established for what advertising will be and what form it will take?
O'CONNOR: No. It's too early. I mean, one of the things that we're doing is we're really segmenting the market. There's different advertisers. People like direct marketers and national brand advertisers, or local and regional advertisers have different needs and we're providing different solutions for those needs. I would never say - I mean, this is continually evolving. We're continually learning. People are experimenting. So, I'm not sure this medium's ever done. I think it's constantly evolving.
METAXAS: And who do you see as your major competitors? Other Internet companies or actually perhaps the TV broadcasters and radio broadcasters?
O'CONNOR: Well, I think long term, you know, the big nut that all the Internet advertisers are going after is the $400 billion traditional advertising market. And as a medium, as we prove ourselves, [to] be the most measurable, most effective medium, we believe we're going to get a bigger chunk of that over time.
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