LookSmart (Nasdaq: LOOK) fell 0.781 to 2.312 early Friday after theInternet directory company warned that fourth-quarter results will be hurtby a slowdown in the online advertising market.
The company also said it cut 172 jobs, or 31 percent of its workforce, aspart of restructuring aimed at focusing on its more profitable operations.The restructuring will result in a charge to first-quarter earnings, LookSmart said.
Revenue for the fourth quarter will likely be US$30 million to $31 million,below the $33 million to $36 million previously projected, while the lossbefore extraordinary items will total 14 to 15 cents per share. Analysts hadexpected San Francisco-based LookSmart to lose 12 cents per share.
“Untargeted advertising is declining, while highly targeted online directmarketing is growing rapidly,” said chairman and chief executive officerEvan Thornley. “However, in the fourth quarter, the parts of our businessthat were weakening did so faster and to a greater degree than expected.”
Thornley also said the company’s targeted listings businesses grew more than 40percent during the quarter “despite very negative industry trends.” Thecompany’s subsite listings, he said, are being used by Amazon and eBay,among others. Overall, the listing businesses generated $10 million over thethree quarters they have been in existence, he said.
In addition to the job cuts, the company said it will cut other expenses inorder to save about $44 million per year.
“We believe that at this time of industry transition, it is critical that weare completely focused on the large emerging listings opportunity,” saidThornley.
The company plans to report results January 25th.