Avenue A Cuts Revenue Guidance

Online marketing technology firm Avenue A said its first-quarter revenues would come in below expectations, as the bad news from the Web ad sector continues.

The Seattle-based firm said revenues for first quarter would come in at about $20 million to $25 million. Previously, the firm had given guidance that it would bring in about $30 million to $33 million — a figure that itself was 30 to 35 percent less than the year-ago period.

Although the company did not give earnings guidance for the quarter, it will probably post its worst quarter yet, despite having cut 15 percent of its 450-person staff in January. Last quarter, when the firm made almost twice as much — $48.2 million — in revenues, it posted a loss of $0.11 per share, or $6.4 million.

Analysts had previously expected the firm to post a loss of $0.14 per share for first quarter 2001, according to Thompson Financial/First Call.

Executives pointed the finger at reduced Internet advertising spending, reflecting “concerns about general economic conditions.”

“Clearly we are operating in a difficult and uncertain market environment,” said president and chief executive officer Brian McAndrews. “Our lower revenue expectations are the result of cuts in online ad spending that are deeper than we had been anticipating.”

The news comes soon after a similar announcement by the industry’s largest player, Yahoo — which last week said it would not meet previously forecast revenue guidance.

Despite the bad news at his company, and across the industry, McAndrews said he has faith in the online ad market to pick itself up — though the company did not give future guidance.

“In spite of these conditions, I feel confident about our business. Our level of customer satisfaction remains high, and we have made some significant client wins during the quarter,” he said. “Our gross margin rates have not been impacted, and we continue to invest in our technology. Our strong balance sheet positions us well to weather this economic downturn and strengthen our leadership position within our industry.”

McAndrews did not say whether the change affects the firm’s previously predicted breakeven point in the first half of 2002.

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