7 replies to this topic

[Webby]

Shares of LookSmart shed 79 cents, or 21%, to $3.01 on Nasdaq. The company said Microsoft’s MSN has been testing various options on its United Kingdom search page to determine the impact of eliminating or replacing most of the company’s directory listings supplied by LookSmart.

In a note Friday, US Bancorp Piper Jaffray analyst Safa Rashtchy said that he believes MSN will renew its agreement with LookSmart “but the major unknown factors are the level of implementation of the company’s listings on MSN’s page, which could determine the total revenue generated for LookSmart, and the revenue-share agreement.”

If Looksmart lose MSN as it seems likely (they don't test the impact of removing listing for the sake of it) or their revenue reduces drastically due to greatly reduced exposure of Looksmart sponsored results, what's left for them?

Hardly surprising the shares took a tumble. If you are considering a looksmart listing you might be wise to wait a bit :-)

[Mel]

Hi Webby
Well we can always hope......
There are lots of reasons that MSN might play around with LS, whose current agreement with MSN expires Dec 3. Chief among them might be to drive the share price down as a prelude to a takeover to compliment and/or supplant the proposed MSN search engine.

LS has a bleak future if MSN did not renew their agreement, but a buyover by MSN would give MSN an established directory, and a reasonable search engine to replace Inktomi results immediately

[Vertster]

Hi Webby
Well we can always hope......
There are lots of reasons that MSN might play around with LS, whose current  agreement with MSN expires Dec 3. Chief among them might be to drive the share price down as a prelude to a takeover to compliment  and/or supplant the proposed MSN search engine.

LS has a bleak future if MSN did not renew their agreement, but a buyover by MSN would give MSN an established directory, and a reasonable search engine to replace Inktomi results immediately

Chief among them might be to drive the share price down as a prelude to a takeover to compliment  and/or supplant the proposed MSN search engine.

This is what I am starting to expect. If it happens, I would expect Microsoft to dump Overture. This would be a serious blow to Yahoo, since MSN provides almost 2/3rds of Overtures revenue (as reported in their quarterly report.)

[Haystack]

Hi Verster, it looks like you missed the last part of that sentence from the quarterly report:

During the three months ended June 30, 2003, we earned approximately 63% of our total revenue from advertisers who received paid introductions through Overture as supplied by Microsoft (primarily msn.com and MSN Panel on Microsoft’s Internet Explorer) and Yahoo!.

I'd very VERY surprised to hear that MSN provided more revenue than MSN for OVER. Either way, Yahoo must be working off the assumption that Oveture is worth what they paid for it with or without the MSN business that will surely go away.

[Webby]

I'm not sure that with the terrible PR Look$mart went through due to the atrocious handling of their terms and condition changes, whether they wouldn't be a liability for MSN should they choose to buy them out. Looksmart have lost a LOT of favour amongst advertisers and SEOs. If I was MSN, I wouldn't touch them with a barge pole. That said and done, they do have directory. Although the use of directories is declining rapidly or users are using the Google (ODP) directory.

[Vertster]

Hi Verster, it looks like you missed the last part of that sentence from the quarterly report:

I'd very VERY surprised to hear that MSN provided more revenue than MSN for OVER.

Hmmm... well I did not consider that Yahoo was grouped together with MSN in that last sentence of the report, but now that Yahoo owns Overture, it would make MSN their biggest revenue source, wouldn't it? Maybe not 63% though...

[Vertster]

I'm not sure that with the terrible PR Look$mart went through due to the atrocious handling of their terms and condition changes, whether they wouldn't be a liability for MSN should they choose to buy them out. Looksmart have lost a LOT of favour amongst advertisers and SEOs. If I was MSN, I wouldn't touch them with a barge pole.

I think they might fit together really well. Microsoft is not exactly known for their fair licensing terms/ethical business practices either

[Jill]

Yeah, that's what I was going to say too. I think MSN and LookSmart are like two peas in a pod. Their only goal is to see how much money they can squeeze out of their customers.

J