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LookSmart (Nasdaq: LOOK) fell 0.781 to 2.312 early Friday after the Internet directory company warned that fourth-quarter results will be hurt by a slowdown in the online advertising market.
The company also said it cut 172 jobs, or 31 percent of its workforce, as part 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 loss before extraordinary items will total 14 to 15 cents per share. Analysts had expected San Francisco-based LookSmart to lose 12 cents per share.
"Untargeted advertising is declining, while highly targeted online direct marketing is growing rapidly," said chairman and chief executive officer Evan Thornley. "However, in the fourth quarter, the parts of our business that were weakening did so faster and to a greater degree than expected."
Thornley also said the company's targeted listings businesses grew more than 40 percent during the quarter "despite very negative industry trends." The company's subsite listings, he said, are being used by Amazon and eBay, among others. Overall, the listing businesses generated $10 million over the three quarters they have been in existence, he said.
In addition to the job cuts, the company said it will cut other expenses in order to save about $44 million per year.
"We believe that at this time of industry transition, it is critical that we are completely focused on the large emerging listings opportunity," said Thornley.
The company plans to report results January 25th.
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