Despite praise from analysts, strong quarterly reports and its position in a rapidly growing industry, Westlake Village-based ValueClick’s stock has yet to see the dividends. As of the close of NASDAQ trading on March 31, ValueClick closed at $10.59 per share, down from a 52-week high of $14.65, registered on Jan. 4 of this year. This comes in spite of the online advertising company’s most recent earnings statement that showed ValueClick’s growth outpacing the industry average. In 2004, the firm reported a 42 percent growth rate. In contrast, according to a report issued by the Internet Advertising Bureau and PricewaterhouseCoopers, the online advertising industry grew 30 percent during last year, a notable increase from the 8 percent growth that non-online advertising experienced during the same period. In ValueClick’s report for the fourth quarter ended December 31, 2004, the company reported net income of $13.5 million, or $0.16 per diluted common share, compared to $5.3 million, or $0.07 per diluted share, for the fourth quarter of 2003. The company’s revenues were also up dramatically, at $54.4 million, an 80 percent increase from the $30.3 million it reported for the same period of 2003. It’s because of these growth numbers, the booming online advertising industry and what is seen as a savvy management team that Wall St. analysts continue to tout ValueClick as a solid investment. But while they may not agree, analysts say that some investors do have concerns with the stock. Youssef H. Squali, an Internet analyst for Jefferies & Co., has a buy rating on ValueClick, but he admits that the stock has been relatively flat of late. “We like the space they are in. They are one of the leading providers of affiliate marketing, a business that’s growing fairly rapidly,” Squali said. “The drawback is that they are a portfolio company, running different assets under the same umbrella. It doesn’t provide a lot of visibility. It’s a matter of brand recognition, transparency and visibility, with a lot of the investors.” Different brands Indeed ValueClick does run several different brands. The central ones are ValueClick Media which focuses on direct and brand marketing; Commission Junction, one of ValueClick’s fastest growing brands, providing affiliate marketing from online business to online business; MediaPlex, which handles the advertising and e-mail technology side of the business; and Pricerunner.com, the company’s most recent acquisition, a comparison shopping website that focuses on Europe. ValueClick plans to introduce Pricerunner.com to the United States in the second quarter of this year. Gary Fugues, ValueClick’s director of corporate communications, agrees that ValueClick’s complicated array of brands does pose difficulties for investors to understand the business, but feels that as the business and the industry become more established, this issue will gradually go away. “It makes it a little more complicated for an investor. A lot of investors like to touch and feel an investment and we’re a more complicated story. It requires a little more work to get comfortable with what we do,” Fugues said. “But if you believe in the secular growth trends in online advertising, over time advertisers will want to work with fewer vendors and we think that that positions the company quite well. Over time, the multiple online strategy will be a good one for us.” The company’s stagnant stock price is also attributed to the company being tardy in filing its 10-K with the Securities and Exchange Commission. “They delayed the filing of their 10-K and waited until the last possible day to turn it in, even after they got an extension. Investors generally have concerns about a delayed filing,” Eric Martinuzzi, an analyst for Craig-Hallum Capital, said. Fugues blamed the delay on a complex tax accounting issue. “Since we had such a strong 2004 and a healthy outlook for 2005, our auditors wanted to revisit the reasons. There was a complicated tax accounting issue that we needed to resolve with our auditors. We got it done and it didn’t impact operations at all,” Fugues said. Perhaps the final reason why the stock hasn’t performed well is its position as a small cap tech stock, a sector that has been in a recent slump. “Small cap tech stocks in general have experienced a decline of late. It’s like somebody rang a bell on Jan. 1 and said ‘get out,” Squali said. With globalization becoming a necessity rather than an option for tech companies, analysts believe that in order for ValueClick’s stock price to rise, the company needs to continue expanding overseas. “They need to expand internationally and that’s what they’ve been doing. They’re taking their affiliate marketing program and pricerunner.com and expanding overseas. They have some interesting assets overseas which they’re going to bring to the United States. There are a number of initiatives underway that could help the growth continue and accelerate into 2006,” Squali said.