Remember those halcyon days of 2007, when dotcom bulls told us that even the financial industry went into the toilet, the online ad money it was spending would miraculously stay afloat? We'd like those days back.
Instead, we get this: Shares in Bankrate (RATE) tumbled more than 10% after the firm admitted that online display advertising is weak, and lowered revenue and EBITDA guidance for the rest of the year. Weakness in the financial ad sector, of course, will affect other Internet players, too--namely, Yahoo (YHOO).
Bankrate said revenue would come in slightly over $40 million in Q2, less than the Street range of $41 to $42 million. EBITDA is expected at $12.3 to $12.7 million, shy of a consensus Street estimate of $15 milllion. In addition, Bankrate cut 2008 revenue guidance 2% to $164 to $169 million, and EBITDA guidance 15% to $54 to $58 million. RATE shares traded nearly 11% lower to $29.41 at midday Monday on the NASDAQ.
It's been nearly a year since Bankrate CEO Thomas Evans assured investors that his business was solid, and that any pullback in mortgage advertising would be replaced with dollars from other financial advertisers, and he's made similar proclamations since. Hence today's surprise -- he's still arguing that he didn't really see this coming:
Our business remains fundamentally solid. However, the global problems in the financial sector have surely had an impact on our display advertising business and we have continued to experience softness in display advertising from several of our largest financial advertisers. At this time we don't sense that the display advertising environment is getting worse, but there has been little improvement to date. The rest of our business remains solid. Cost-Per-Click, "CPC" revenue for the quarter was up 30%, and our deposit, insurance and credit card business continue to do well.
See Also: Internet Ad Slowdown Hits WebMD
