Answers Corp., operator of Answers.com, announced it will purchase privately held Lexico Publishing Group, LLC, owner of Dictionary.com, Thesaurus.com and Reference.com, for $100 million in cash. Its shares were reportedly halted in extended trading after dropping more than 14%. Lexico had revenues of $7m, EBITDA of $2.9m and net income of $2.8m last year. The acquisition is expected to be accretive to 2008 EBITDA. Lexico's web properties, which generate around three times the number of total page views of Answers.com, will remain standalone brands. "Lexico's suite of popular brands, steady direct traffic and loyal users are valuable assets that we believe will reduce our products' reliance on search engine-driven traffic," commented Robert S. Rosenschein, CEO of Answers. In a press release for the acquisition, Answers also downward revised its Q2 (ended June 30) revenue forecast to $2.75-$2.8m, from $2.8-$3.2m previously, citing "more pronounced seasonality" and "slower than anticipated ramp of its direct ad sales effort." Answers lost 0.85% to $12.90 during normal trading.
Sources: Press release, Associated Press, TheStreet.com
Commentary: Why Answers.com Is Not Completely Crazy • Answers Corporation Buys Dictionary.com For the Domain Name • Answers Corp. Buys Dictionary.com For $100m Cash, Then Issues Revenue Warning • Why CNET, TheStreet.com, WebMD, PlanetOut, The Knot and Answers.com Won't Be Acquired
Stocks/ETFs to watch: Answers Corp. (ANSW). Competitors: Google Inc. (GOOG), IAC/InterActiveCorp (IACI), Microsoft Corp. (MSFT), Yahoo! Inc. (YHOO)
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