Fastclick To Go Public

Online advertising network Fastclick, Inc. on Wednesday filed a prospectus with the U.S. Securities and Exchange Commission for an initial public offering, which the company hopes will raise $92 million.

The move comes about seven weeks after Fastclick secured $75 million in financing from three companies: Highland Capital Partners, Oak Investment Partners, and The Walt Disney Company's Steamboat Ventures capital investment arm. As part of that deal, Bob Davis and Dan Nova from Highland and Fred Harman from Oak agreed to join Fastclick's board.

While online advertising has rebounded this year, ad networks such as Fastclick continue to face a myriad of challenges. Among the biggest, warned JupiterResearch analyst Niki Scevak, is that publishers currently have an especially strong bargaining position now that so many marketers again want to advertise on the Internet.

"Publishers have an embarrassing array of options available," said Scevak. "They have a world of options here." This shift in negotiating power makes it harder for companies such as Fastclick to strike good deals, said Scevak.

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Fastclick also warned of a host of other risks. For instance, the company cautioned that almost half-- 47.6 percent--of its Internet advertising revenue from 2003 came from its largest 10 advertisers, meaning that losing one large account could severely damage the company. Fastclick also sounded an alarm about new pop-up blocking technology, saying that it derived a "substantial portion" of revenue from deploying pop-under ads.

Fastclick revealed in its prospectus that it first became profitable in 2001, and generated net income of half a million for that year, $4.1 million in 2002, and $5.8 million last year. Net income for the first three quarters of 2004 came to $3.3 million, while revenue was $39 million.

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