• by Ross Fadner , March 11, 2004

Looksmart is starting to look up, following a revised financial guidance released by the company on Thursday, which says things aren't quite as bad as it projected previously. The San Francisco-based search solutions company now expects revenues from the first quarter to be in the range of $21-$23 million, up from the $16-$18 million that was forecast previously.

The stock closed Thursday at $1.89 on the strength of the news, 15 cents or 8.5 percent higher than its Wednesday close on the Nasdaq.

Looksmart's adjusted net loss for the quarter is now projected to be between $10 million and $12 million, while its restructuring charges are projected to be between $4 million and $5 million, compared with previous projections of $12-$14 million and $5-$6 million, respectively.

The company attributes the improved financial outlook to growth in its main LookListings search advertising business. Looksmart recently added new distribution partners to its sponsored search network, and has been able to secure relationships with search marketers that are unable to afford larger search networks like Yahoo! and Google. Microsoft Corp.'s MSN also signed a new agreement with Looksmart to continue periodically providing Looksmart with search results for its MSN service.

Damian Smith, Looksmart's interim chief executive officer, said in a statement: "We expect our sponsored search revenue to grow by over 25 percent compared to the first quarter last year. In addition, our restructuring efforts remain on track, and we continue to expect a strong cash position in excess of $60 million at the end of the quarter."

On January 15, MSN dropped LookSmart from its paid inclusion plans and didn't seem to have any intention of sustaining a business relationship with the search company, so the new deal could bode well. While the terms were not disclosed, the deal is probably nowhere near the scope of what it once was, accounting for nearly 70 percent of LookSmart's total revenue. As a result of that loss, the company cut its staff to less than 200, from 429 at the end of the fourth quarter.