ValueClick, Inc. (NDAQ: VCLK) shares rose 4 percent during today’s session and jumped an additional 6 percent after hours after the company announced both mixed earnings and the fact that it settled a probe launched by the Federal Trade Commission (FTC). Despite the poor economic sentiment in the United States, the company seems to believe that its future remains bright. Shareholders are hoping that these events will help clear clouds over the company’s head and pave the way for a long-awaited rise in share price. So, is it time to buy?

ValueClick announced revenues of $183.1 million on an adjusted-EBITDA of $45.6 million, which exceeded previously issued guidance and increased 14 percent from the fourth quarter of 2006. Meanwhile, diluted net income per share came in at $0.18, which was at the high end of the previously issued guidance range. The company’s balance sheet also looks healthy with $287.5 million in cash, cash equivalents and marketable securities with no long-term debt. Even better, the company currently has $50.6 million of authorization remaining on its stock repurchase program.

ValueClick also announced that it paid $2.9 million to settle the FTC lawsuit that alleged the firm used deceptive marketing practices that violated the CAN-SPAM Act and FTC Act. This development eliminate the cloud that has been hanging over the company’s head for some time and led to an improvement in its marketing practices. The online marketing firm believes that this development will also help set the guidelines for the lead generation industry as a whole and will establish a new set of best-practices.

In the end, this is all good news for ValueClick and its shareholders. The company’s revenue mix remains favorable and its operating margins appear to have finally bottomed for the time being. However, investors should be careful to buy this company for the long-term as the sector in general continues to suffer from increased competition that is pressuring margins despite an increasing move to the Internet for marketing expenditures. Combined, these factors definitely make VCLK a stock worth watching!

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Vonage Holdings Corp. (NYSE: VG) shares rose over five percent today as its losses narrowed and subscribers rose. Unfortunately, the top-line numbers do not accurately reflect what is really going on in the company. A closer investigation reveals that the company has several internal trends that make their earnings unsustainable over the long-term if it can’t get its act together. So, what are these trends and what does it mean for Vonage going forward?

Vonage reported earnings that were lower than analysts expected, but greater than what the street predicted, sending shares higher in today’s session before dropping after hours. The net loss for this quarter came in at $11.1 million from $117 million a year earlier. Meanwhile, subscriber additions came in at 56,000 which is down from 166,000 last year. The company may have lowered its losses, but only because it reduced its marketing expenditures. Unfortunately, the company’s revenue per line declined while its marketing costs increased. Clearly, this is an unsustainable trend that must be reversed before this company can be a viable investment.

Vonage also has $253 in convertible debt that can be put back onto the company in December of 2008. This is money that the company cannot afford to pay at current rates, and they are in discussions to refinance the debt to make it more manageable. Vonage said that it believed that the situation will be resolved, but there are no assurances. As a result, it will likely receive a “going concern” letter from its auditor soon that may send shares lower. And to make matters even worse, the company announced that it would restate its second and third quarter results to correct its reported non-cash compensation expense, which it believes is off-base.

In the end, these are major concerns that Vonage must address in order to avoid some major problems and perhaps even bankruptcy. Additionally, there are some near-term announcements that could drop the stock substantially if they indeed surface. Combined, these factors make VG a good short target and definitely a stock that non-speculators should stay away from until the picture clears up!

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Borders Group, Inc. (NYSE: BGP) is one of the many retailers hit hard by the economic downturn. Shares are trading more than 50 percent off of their 52-week highs while investors express concerns over the company’s lackluster profits and thinning margins. Increased competition from both its brick-and-morter competitor, Barnes & Noble Inc. (NYSE: BKS), and online competition from Amazon.com, Inc. (NDAQ: AMZN), has cast doubt on the company’s ability to grow in any meaningful way. So, why buy this company?

Bill Ackman’s Pershing Square is one major investor that has taken a major interest in the beaten down company. The activist hedge fund has recently built up an 18 percent stake in the troubled bookstore with options and derivatives that could allow him to boost it to 26.2 percent. Meanwhile, Pershing Square’s Richard Mcguire was elected to the company’s board of directors on January 17th, which could give the hedge fund substantial leverage when proposing any changes. However, many remain unsure of what the famous activist sees in the bookseller that is feeling the heat from its competitors.

Some believe that it could be a vote of confidence in the company’s turnaround plan. Borders is prepared to open its new concept store this Thursday in Waters Place shopping Plaza in Pittsfield, which has many investors excited about the new possibilities. The concept store has been hailed by the company as a new retailing model that will embrace technology, boost sales, and differenciate the company from its larger rival Barnes & Noble. Others suggest that the takeover rumors that have surrounding the company for so long may finally come to fruition with the stock trading at record lows.

The Borders Group itself is also trading at some cheap multiples. The company’s price-to-book rate is very low relative to its peers, suggesting that the company’s assets are undervalued. Meanwhile, its price-to-sales ratio is also very low, suggesting that the company’s revenues are strong if it can cut costs and debt to increase profitability. In the end, these components do make for a good turnaround play provided that the company can orchestrate a successful turnaround. Many believe, however, that with an activist investor on the board, the company should be able to do something right!

Overall, Borders Group is an interesting stock that is definitely worth watching. Ackman’s portfolio returned 22% last year and his fund has a great track record of success over the long-term. His vote of confidence in the turnaround of this company along with his director on the board make this a stock that is definitely worth watching over the next months and years!

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