LookSmart Sees Big Losses in '04LookSmart told investors last week that the end of its paid inclusion deal with Microsoft on Jan. 15 would severely hamper its business in 2004, with losses of up to $30 million.
The guidance cast a pall over an otherwise upbeat earnings report. In the final quarter with Microsoft's MSN as a distribution partner, which accounted for two-thirds of its sales, the San Francisco paid inclusion provider returned $1.6 million of net income on $44 million in sales. In the first quarter, LookSmart expects a steep decline, with losses of $13 million on $17 million in revenue.
LookSmart said it had $70 million in cash at the end of the year and should end the first quarter with $60 million.
New interim CEO Damian Smith said the company would make up for the loss of MSN by developing its new business lines, including a paid search business begun last October, and instituting more cost cuts. Smith said the company learned from Microsoft's jilting, vowing to pursue a more diverse customer base. "We are no longer actively seeking paid inclusion deals with large distribution partners," he said.