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DoubleClick Mulls Sale, Other Options

DoubleClick has hired an investment bank to explore several options, including an outright sale and a breakup of the company's operating units, DoubleClick said over the weekend.

The New York advertising-technology company said Lazard Freres & Co. would consider a number of alternatives for the company, including: “a sale of part or all of its businesses, recapitalization, extraordinary dividend, share repurchase or a spin-off.”

A DoubleClick spokeswoman declined to elaborate on the statement.

A sale of the company could result in splitting off the company's online and offline businesses. DoubleClick expanded beyond its roots in online advertising with a variety of acquisitions, notably the purchase of the Abacus database business in 1999. Abacus and online ad management each accounted for 37 percent of DoubleClick's sales last quarter.

Despite a revitalization of the online advertising business, DoubleClick has seen little growth in its ad-serving business. Its ad-management revenues fell 3 percent year-over-year in the third quarter. CEO Kevin Ryan told financial analysts he expects prices to “bottom out” sometime next year.

DoubleClick faces competition in ad-serving services from rivals like aQuantive's Atlas DMT, 24/7 Real Media, Accipiter and other firms. Ad-serving prices have dropped considerably in recent years. DoubleClick has sought to buck this trend by branching into serving animated rich media ads that carry higher pricing.

Yet Motif, DoubleClick's rich media ad serving solution, has gotten off to a slow start, not gaining acceptance by MSN until August and AOL last month. DoubleClick also said its marketing automation business, outside of e-mail, performed poorly in the third quarter.

In search marketing — the fastest growth area for online advertising in the past two years — DoubleClick only entered the business in May through its purchase of Performics for $58 million in cash and an extra $7 million in performance bonuses. The search and affiliate marketing unit contributed $5.1 million in sales in the third quarter.

DoubleClick has options other than a sale or breakup, thanks to its large amount of cash accumulated during the dot-com boom. At the end of the third quarter, it had a net cash position of $388.9 million. The company said it bought back 6.4 million of its shares in the third quarter and has spent $100 million in the past year repurchasing stock.

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