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LookSmart Posts Gain, Acquires NetNanny
April 30, 2004

LookSmart Ltd. swung to a loss for the first quarter but managed to beat analyst estimates, the company said Thursday.

LookSmart reported a net loss of $7.1 million, or 7 cents a share, for the quarter ended March 31. A year ago, the company reported net income of $1.1 million, or a penny a share. Revenue for the San Francisco-based Web search company was $27.6 million vs. $29.4 million for the year-ago period.

The company's results beat the consensus estimate of a loss of 9 cents per share for the period.

LookSmart announced earlier Thursday that it had acquired Net Nanny, an online filter, for $5 million. The company also raised its expectations on revenue and earnings for the year.

LookSmart officials said they expect to report revenue for the year of $76 million to $81 million, up from $45 million to $50 million. Its net loss, previously forecast to be in the $26 million to $30 million range, was narrowed to $20 million to $22 million.

The company's shares closed Thursday at $2.44, up 8 cents.Net Nanny's filtering software is designed to let parents restrict access to certain forms of content, such as pornography, on family computers.

The acquisition was a strategic one, LookSmart chief executive Damien Smith said. "Strategic, because integrating our search technology into Net Nanny provides a stronger product for their users while also providing LookSmart with a desktop platform from which to launch high margin and paid listing applications," he said.

"Net Nanny is expected to produce a positive margin contribution for LookSmart in 2004," Mr Smith said. LookSmart said its own web search technology had filtered out pornographic content and adult advertising since 1998.