Rocket Fuel Tanks On Advertising Inventory Quality Concerns

Rocket Fuel Inc.

shares tanked Wednesday after the company cut its revenue outlook on inventory quality concerns. The company also agreed to pay $100 in cash and 5.4 million shares to acquire [x+1] Inc. in a deal expected to close in the fourth quarter. Chief Executive George John said the company, which provides technology for automated buying of online ads, lowered its revenue expectations by about 3 percent because of concerns expressed recently by customers about inventory quality. Tighter control of client spend by the agencies' internal trading desks and a shift toward direct licensing by advertisers also contributed to the lower outlook. "We expect these trends to continue to influence growth rate," John said. Rocket Fuel cut its 2014 revenue outlook to between $403 million and $427 million, from an earlier $420 million to $435 million. Analysts expect $422.6 million. It forecast third-quarter revenue of $96 million to $100 million versus a Street view of $109 million. For the second-quarter, Rock Fuel's adjusted loss widened to 7 cents a share, from 11 cents a year earlier. Revenue grew 70 percent to $92.6 million from $54.4 million last year. Rocket Fuel traded recently at $17.93 a share, down more than 27 percent.