FindWhat Makes Commitment, Profit

  |  February 10, 2004   |  Comments

The paid search provider will make that acquisition after all and notches a record quarter to boot.

Paid search provider FindWhat.com reported the successful re-negotiation of its protracted on-again, off-again courtship with paid listings company Espotting Monday, along with record fourth quarter results for 2003.

FindWhat has signed an amended agreement to merge with United Kingdom-based Espotting Media. Shareholders of Espotting will get 7 million shares of FindWhat stock and about $20 million in cash. Fort Myers, Fla.-based FindWhat will also issue options and warrants for an additional 800,000 shares of its stock to Espotting employees and affiliates. The deal is valued at about $170 million based on last Friday's closing stock prices.

The merger was first signed in June 2003 with a $163 million price tag. Then FindWhat renegotiated its agreement after it found problems with Espotting's finances. The companies apparently resolved their issues after Espotting submitted its financial statements using generally accepted U.S. accounting practices and had them audited by Ernst & Young. The deal is now expected to close in the third quarter.

FindWhat expects the deal to boost its bottom line within one quarter after the arrangements are finalized, the company said.

On Monday, FindWhat also reported fourth-quarter net income of $3.5 million, or 15 cents per share, compared to profit of $2.7 million, or 14 cents per share, in the fourth quarter of 2002. FindWhat beat the consensus of a group of ten analysts polled by Thomson/First Call, who had predicted net income of 14 cents per share.

The company had record revenue in the fourth quarter of $21 million, an increase of 57 percent over revenue of $13.4 million in 2002's fourth quarter. FindWhat had revenue of $72.2 million for the year, a 69 percent increase over $42.8 million in revenue for 2002.

As to what drove the growth, "Findwhat.com network, the original pay per click business, is still the core of what we do. We expect that growth to continue just by doing more deals similar to what we've done in the past," said Craig Pisaris-Henderson, chairman and CEO of FindWhat.

For 2004, the company offered guidance for revenue of $95 million, with net income of 60 cents per share, on the low side of some analysts' expectations.

However, FindWhat has a history of conservative guidance and has been known to revise estimates upward, as it did in the company's second quarter earnings report for 2003. Revenue for the fourth quarter of 2003 was more than $700,000 ahead of the company's previously announced guidance.

Unlike Overture and Google, which compete over the top portals, FindWhat has focused on second- and third-tier distribution sites including CNET's Search.com, Excite and Dogpile.

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Janis Mara

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