LookSmart misses guidance, LooksDumb

Jan.13.05 | About: LookSmart Group, (LKST)

LookSmart missed numbers and the stock fell 21% in after-hours trading. Here are the details of the miss and a couple of quick comments:

Details: LookSmart's Q4 revenue (from continuing operations) is now expected to be
$16.5 million to $17.0 million, versus previous guidance of $18-20
million. Net
loss is now expected to be about $1.4 million to $1.7 million versus previous guidance of $1 million.

LookSmart CEO David Hills is quoted in the press release as saying:

"The company did not sufficiently deploy sales resources against new advertisers to achieve the projections issued in late October. We have adjusted our deployment and in a separate release, will announce the appointment of two new senior managers tasked to drive our business."

Quick comment: Amazing that LookSmart missed, given the strength of PPC pricing in Q4 and news today that business is strong enough for the comparison shopping firms to raise prices.

Stock impact: Does LookSmart's business have structural problems? Hills' attempt to place blame on the sales force sounds implausible given recent evidence of strong ROI for advertisers from PPC ads, which should have meant that sales weren't a challenge.

One year LOOK chart below.

Full disclosure: At the time of writing I'm long SHOP.