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Looksmart a "Work in Progress" - But Moving to Canada?

Q1 Revenues (as expected) were poor. - Shareholders were told to expect this 'on the back of' the Yahoo! - Bing integration. (Ho-hum).

Looksmart are very much still, a "Work in Progress".

LookSmart Reports First Quarter 2011 Results

Some 'take-aways' that I have noted, include the following:

Looksmart's "Gross margin from continuing operations has now increased to 45% in the first quarter of 2011 - - UP from 32% in the first quarter of 2010 and, - - UP from 40% in the fourth quarter of 2010."

[That's] Substantial.

Looksmart's ...."Traffic acquisition costs (NYSE:TAC) for LookSmart's Ad Network decreased to 52.3% from 67.5% in the first quarter of 2010, and 58.2% in the fourth quarter of 2010."

[That's] Substantial.

Looksmart's .... "Total operating expenses in the first quarter of 2011 were $3.6 million. (In backing out $0.9m for the restructuring expense)

This compares well to Operating expenses for the first quarter - 2010, of $4.6 million. (When backing out $0.2m of severance expense.)

And an improvement on the Operating expenses for the fourth quarter of 2010 that were $3.9 million."

Down $0.3m Q/Q or, down by $1M Y/Y and surely, that's also ...


And as a shareholder over on Yahoo's LOOK board clearly points out,

"They made a profit on 34% less Y-Y revenues. It doesn't matter what revs are if you can't make money."

So it's now a case of simply scaling-up those revenues. And the Co will do so, too. All in time and not before then. - - In today's conference call (that followed the Q1 - 2011 Report) Looksmart's CEO made mention of what is now 'fact', that Looksmart are now starting to work with BOTH the "Yahoo" and the "Google" Publisher partner networks.

Not that this hadn't been strongly suggested both here and elsewhere.

Re: What did Terry Dial buy her shares for?

Today, there was.......

No big announcement of that predicted (the Looksmart) "AUDIENCE BOMB" being 'dropped' by Looksmart. Just the news that Advertisers, DSP's (and all the advertisers that they represent), in using the fully independent Looksmart solution (and - - - by their joining it's RTB global marketplace), can now gain access to huge inventory from off, BOTH the "Yahoo" and "Google" Publisher partner networks. (Oh, it's ONLY Yahoo and Google, right? And ...They never mentioned 'huge inventory'? - Doubters I'd suggest should maybe, think again.) As it's called, "re-targetable" AUDIENCE.

But about an ULTIMATE Looksmart "moving" of the Co, to Canada?

Yes. Well a significant part of the Co, at least. Today in the CC the CEO confirmed that, "We are planning on adding a significant team in Toronto" - - With all future International billing/revenue calculations then being possibly made, in those richer Canadian dollars?

(Currently: 1 U.S. dollar = 0.953798024 Canadian dollars)

This (any such move), would be warmly embraced by US publishers as members of the Looksmart global marketplace. - - In particular, both Yahoo and Google (themselves), along with the many millions of site owners within their publisher networks.-- Certainly when those $CADs finally get to be repatriated into their US Bank accounts.

Read on.

From within this, a most excellent article Where Is Google Investing Its Marketing Spend Internationally? by Andy Atkins-Krüger (and, over at Search Engine Land), he points out the following:

< Google's US revenues very slightly declined in its Q-1 of 2011.

International Revenues Are Star Performers

.What the analysis in the graphic suggests is that revenues outside the US have been continuing to grow with the possibility that this growth is actually accelerating & masking this slight decline in US performance.>

He then asks a fair question: "Does this growth in international markets justify the increase it headcount"?

Google (so obviously) feel so. As those International Revenues are (and will become even more, in time) much more 'meaningful'. When they're compared with a declining (with so much more to come), USD and will thus - help get to grow Google's own top-line.

Google's International HQ's is based in Ireland where they already enjoy considerable Tax advantages from their being so. (Just who isn't based there?) - Google will increase it's International head-count to get to squeeze every last 'buck' from it's off-shore (US) markets. -- In doing so, this will increase Looksmart's own revenues, being the revenue that will soon be generated - from off the many global Google international publisher sites.

Just as Looksmart's own (possible) move of it's billing area off to Canada can/would then help Google - certainly when transferring that $CAD 'value', into $USs. - You scratch mine and I'll scratch yours?

Just an opinion, as always.

LOOK: May 3: $1.92 Down 0.01 (+0.52%)


ps; And here come the CANADIANS?

There's no "two-ways" about Looksmart's most recent appointment of Scott L. Kauffman to its Board of Directors, I feel.

Scott is also a member of the board of MDC Partners (Nasdaq:MDCA - News) - - being a holding company based in Toronto, Canada and New York. And, according to Wikipedia they are the 10th largest advertising holding company in the world. - - And ..Unlike other holding companies, MDC Partners often like to position itself as a "partner" in their taking majority stakes, generally 51%.

From MDC Partners' own Q1 Report [Read the release], the following becomes of "real" interest, in terms of Looksmart's announced move to an area around Toronto, Canada. This may well be significant.

Add-On Senior Notes Offering Completed On April 19, 2011

On April 19, 2011, MDC Partners completed a private offering of US$55 million aggregate principal amount of 11% senior unsecured notes due 2016 (the "Notes"). The Notes were priced at a premium to par at an issue price of 111%, resulting in a yield-to-maturity of approximately 8%. Gross proceeds received from this offering were approximately $61.1 million. MDC Partners used the net proceeds of this offering to repay borrowings under its senior secured revolving credit facility. The new Notes are a follow-on issue to the Company's outstanding senior unsecured notes.

"We are thrilled to have been able to opportunistically take advantage of favorable credit market conditions to raise incremental capital. The successful bond offering provides added flexibility with which to fund our growth strategy," added Mr. Nadal. "The continued reduction in our cost of capital and added liquidity is a testament to the strong results we have delivered since initially issuing our bonds in the public markets in October 2009. We expect this additional capital will be a key driver of our ability to deliver growing incremental shareholder value in the future."

What's even much more interesting, is that Technology and digital services revenue made up 51% of MDC Partners' total revenues of $217.5 million, in Q1 2011.

Note also, that Miles S. Nadal, Chairman and Chief Executive Officer of MDC Partners has bought shares of his Co, in the past two months.

Re: Scott Kauffman himself, was President and CEO of Coremetrics Inc., a web services provider of marketing analytics solution - where he continues to serve as a member of the board. In June last year came the news that IBM had completed it's acquisition of Coremetrics.

Disclosure: Long LOOK and patiently waiting...waiting...waiting...