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Interview with DoubleClick (DCLK) President and COO Kevin Ryan

Liz: Online advertising firm DoubleClick is out with its latest earnings. After the bell, the company posted a loss of 11 cents a share in line with analysts' expectations. With us now to take a closer look at his company's numbers is Kevin Ryan, president and COO of DoubleClick. He joins us this morning from studios in mid-town Manhattan. Good morning, Kevin.

Good morning.

Liz: Let's hash out these numbers first: while you came in in-line with estimates, your losses nearly doubled compared with first quarter 1999. To what do you attribute to that?

Well, these were losses that had been expected. As you have seen even for the eight consecutive quarters we've met analyst expectations on the nose. So, there was very disciplined spending. I think part of this quarter was investing that will pay off later this year as you know, the analysts expect us to cross profitability in the third and fourth quarter and we think we are on schedule to do that so, we feel great about how this quarter went.

Liz: So, in the third and fourth quarter profits you will come back on here, we know a lot of the investors do. There is a concern that a lot of these Internet blue chips haven't come up with earning?

I think these are companies that started four years ago so, what I think will be very impressive is if we come back in the second half in only our fourth year with a run rate of revenues in terms of half a billion dollars, having built up a global company of 2,500 people at that point and be profitable. I think it is an incredible accomplishment in only four years. You will see the blue chip companies crossing profitability now and some don't.

Liz: Your revenues nearly tripled but there is some concern that the dot coms, many of whom are your customers Kevin, scaled back the marketing plans as cash drives up that your businesses might suffer. These are your customers, are you doing anything defensively to cover yourself if?

We have three lines of business, one is data, it is an off line business so it is not impacted this. The second is a technology business, which pointed out last night, makes 50% of the gross profit that business is more impacted by volume on the Internet, not so much by dot com versus not dot com. The third business is media and that business could be impacted if dot coms slow down spending. We are seeing increase of fortune 500 companies spending money, but business is fantastic.

Liz: DoubleClick is at the center of this controversy over on-line privacy practices. You recently shelved a plan to identify and distribute the names of web site visitors after major complaints by consumer groups. So now, as I understand it, you're negotiating with attorneys general from New York, and Connecticut, among other states to reach a deal. Where does that stand?

Well, in considerations with any aspect of the government, you can't comment too much in the process. What I can say overall is the process is going very well. What we are seeing overall is the government and industry and privacy groups are spending a lot of time learning what works and trying to strike a balance between protecting consumer privacy which is incredibly important. As well, making sure that web sites can sell advertising and remain profitable to keep the Internet free for consumers. I think we are making a lot of progress right now.

Liz: There was a nerve touched there, consumers were angry about what they perceive to be effort on your company's behalf to release the information even to other companies. Do you understand that concern is out there and is some what well-founded.

We understand and feel strongly about is and privacy is incredibly important. If consumers don't feel comfortable on the Internet, it will be hard for the Internet to be successful and our company to be successful. So the whole industry including DoubleClick and it is one of the leading companies. They need to make more of an effort in getting out there and talking to people. This quarter we launched the largest public service campaign, up to 100 million banners out there to talk about privacy and talk about the issues and make sure we can educate all parties and learn as well. We are doing focus groups to understand how consumers feel. It is a very important issue and we are spending a lot of time on it.

Liz: Your stock has seen a pullback in the tech sector. Talk about the future of the major move toward hand held devices. What's DoubleClick's role? On such a small screen, do banner ads really fit?

When we deliver ads, it doesn't matter if it is a banner ad or a text link or a sponsorship. What we are seeing on the handheld devices there will be fewer banner ads and more text links. Not as big as what is on the Internet but it is an area of huge opportunity for us, and we have a lot of resources devoted to it and it is doing well.

Liz: Thanks, Kevin. Kevin Ryan president and COO of DoubleClick.


unknown, April 18, 2000, CNBC- TODAY'S BUSINESS

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