Slowdown for DM Service Suppliers
As world financial crises persist in some countries and loom in others, the stock market continues to show signs of a cautious slowdown. With this development, direct marketing service suppliers, especially those in the interactive segment, saw much of their stock price gains from earlier in the year erased.
The 39 companies in the four service supplier segments tracked by Gruppo, Levey and Capell Inc.’s GLC Portfolio recorded an average stock price decrease of 25.2% for the three months ended Sept. 30, compared with a drop of 10.3% in the Standard & Poor’s 500 during the same period.
Interactive suppliers took the hardest hit, as the average stock price in the category fell 50.6%. For instance, after its February initial public offering at $17 a share, DoubleClick Inc.’s stock jumped $71.63 per share in June. But the issue dropped 66.7% from June to September, plummeting to $23.88 by the end of that quarter.
For the 12 months ended Sept. 30, average DM supplier stocks lost 12.8%, compared with the modest 4.8% increase in the S&P 500 over the same period. Without CMG Information Services’ 343.8% 12-month stock price gain, the sector would have posted an even higher overall average decrease of 22.2%.
CMG’s giant climb is due mainly to its ownership in Internet search engine Lycos and chat-room Web site Geocities, along with more than 25 other Net-related firms. But since July, when CMG’s stock hit a peak of $91 per share, the market has grown weary of the sky-high valuations of Internet issues. From June to August, the company’s stock fell 29.5%, from $75.06 to $53.25.
