Smaller Q3 Loss Lifts LookSmart

LookSmart (Nasdaq: LOOK) was up 17/32 at 8 15/16 early Thursday after the online directory and advertising company reported a smaller-than-expected loss for the third quarter, driven by a 151 percent rise in revenue from a year earlier to $33.4 million.

The company said its operating loss narrowed to $6.7 million, or 7 cents per share, from $17.3 million, or 32 cents, in the year earlier quarter, surpassing analysts’ expectations for a 13 cent loss. Including non-cash charges, the company lost $12.9 million, or 14 cents per share, in the latest quarter.

“LookSmart was founded five years ago, based on a set of business fundamentals that still hold true today and will be true five years from now,” said chairman and chief executive officer Evan Thornley. “Search and directory continues to be the largest, most effective and most lucrative segment of online marketing.”

LookSmart said it is moving to “targeted products,” including listings, “cost-per-click” keyword links and resource centers.

“Search targeting is gaining share from traditional direct marketing vehicles,” like catalogs, point-of-sale promotions and yellow page directories, said Thornley. The market for such listings is $140 billion this year, and is likely to grow at a rate of 9 percent per year, he said, citing Morgan Stanley Dean Witter.

LookSmart said it had $112.9 million in cash and short-term investments at quarter’s end.

On Wednesday, news that VerticalNet would use the company’s Subsite Listings product to promote its 52 B2B marketplaces sent LookSmart shares up 1 7/64.

Subsite Listings, which let searchers find and directly connect to commerce and exchange marketplaces within a Web site, is being used by companies including DealTime, eBay and mySimon.

The product, released during the third quarter, is part of the shift to targeted marketing tactics.

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