More NewsFindWhat Blames Low Growth on Quality Control

FindWhat Blames Low Growth on Quality Control

Company says it's preparing itself for a flurry of private-label deals in 2005.

FindWhat.com’s reported flat income growth for the fourth quarter of 2004, as compared to the year-ago quarter. The company defended its lack of growth by saying it had dropped gambling advertisers and eliminated underperforming publishers — a move it expects to pay off later this year.

The company posted net income of $4.7 million for Q4 on revenues of $58.7 million, resulting in per-share profit of $0.15. Full-year revenues came in at $169.5 million, for a profit of $17 million, or $0.60 a share.

The company painted 2004 as a year of expansion, when it acquired Miva, Espotting, B&B Enterprises and Comet Systems.

Now, executives say, the plan is to focus on quality. Part of that effort includes eliminating distribution partners that aren’t producing conversions. FindWhat’s acquisition of e-commerce software player Miva gives it more insight into whether traffic from various publishers is converting into sales. The company is now taking that information and paring away its distribution network.

“We intentionally removed during Q4 certain traffic sources that would have generated $70,000 of revenue per day,” said Craig Pisaris-Henderson, chairman and CEO of FindWhat.com. “Our focus is to deliver traffic that converts.”

This year will also be a year of international expansion and focus on private-label solutions, company executives said. Pisaris-Henderson expects top-tier media companies to abandon relationships with players like Google and Overture to begin offering their own branded marketplaces.

“We believe the current industry structure is not sustainable and that each of the players will have to offer their own branded solution,” he said. “This trend is evidenced by the recent actions of MSN and Verizon.” MSN recently launched its own algorithmic search engine and is rumored to be cooking up a pay-per-click program. Verizon SuperPages, meanwhile, has a longstanding private-label partnership with FindWhat.

Also in 2005, the company hopes to shed a longstanding legal dispute with Overture over the Yahoo company’s pay-per-click search patent. Google recently settled a legal battle with Overture over the same patent. The trial in the FindWhat case is set to begin in the second quarter.

Despite the uncertainty, FindWhat has optimistic expectations for 2005. For the first quarter of 2005, the company expects revenues of between $55 and $59 million, which would result in adjusted earnings-per-share of $0.12 to $0.15. For the full year, the company predicts total revenues of between $250 and $270 million, with adjusted earnings-per-share of $0.69 to $0.85.

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