At least one ad-supported Web company is feeling the pinch from the slowdown: WebMD cut 2008 guidance today in an an earnings pre-announcement “to reflect a recent shift toward shorter term buying committments in certain of its customers’ consumer advertising purchases.”
Translation: Advertisers are so worried about their own bottom line that they’re avoiding long-term ad committments, so they can more easily cut their own spending later in the year.
The question is whether this is an industry-wide problem or one unique to WebMD. In a research note, Goldman Sachs says it could be the latter — as advertisers test lower-cost health and beauty sites, as well as ad networks.
Either way, WebMD dropped guidance on revenue, adjusted EBITDA, and net income for the year.
WebMD’s new 2008 forecast:
Revenue of $380 to $395 million (midpoint down 4.3%)
Adjusted EBITDA of $97.5 to $107.5 million (midpoint down 9.9%)
Net income of $29.5 to $37.5 million (midpoint down 18.8%)
The old forecast:
Revenue of $395 to $415 million
Adjusted EBITDA of $107.5 to $120.0 million
Net income of $36.5 to $46.0 million
We’ve heard whispers of a weak Q1 in online advertising; WebMD says its Q1 will be fine but with advertisers skittish, trouble lies ahead. Most research firms have lowered their 2008 estimates for online advertising, but few companies have dialed back their own projections.
WebMD (WBMD) stock is getting hammered, down 11.64% to $25.64 a share in midday trading.
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