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Overture Goes To Profit & Other Search Engine Financial News

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More quarterly earnings and financial news have come in since the last newsletter. Among them, Overture makes its first profit, $9 million for the last quarter. Competitor FindWhat also makes a profit, though a much smaller $651,000. For LookSmart and Ask Jeeves, there were continuing losses, though LookSmart's listing sales continue to rise. Both say they have plenty of cash to carry them through. Inktomi also had a loss, though it was less than analysts has expected. Also, a long look at Yahoo's attempt to build new revenue stream, and InfoSpace plans to cut 200 staff. See below for a recap of articles, along with some extended comments from me.

Overture pulls off Web miracle
Wall St. Journal, Oct. 26, 2001
http://www.msnbc.com/news/648132.asp?0si=-

Overture had a net income of $9 million, compared to a loss of $46.1 million for the same time the previous year. As for Overture's listings not being as "comprehensive" as Google's, that reference is to Google's editorial listings and has no relevance to Overture. Overture isn't really a search engine but rather a paid listings distribution network. Given this, it doesn't need to have comprehensive editorial listings -- its partners do. And as for the paid listings, Overture almost certainly has a much greater inventory than Google. As for Yahoo adopting Overture's paid listings model, that shouldn't hurt Overture at all. Overture can distribute across a variety of sites. In contrast, if Yahoo implements paid listings, they will almost certainly be restricted to the Yahoo site. Given this, Yahoo and Overture would be complementary buys, not exclusionary ones, just as people might (and do) purchase to be on Overture and Google.

Small search site finds profit
Reuters, Oct. 24, 2001
http://news.zdnet.co.uk/story/0,,t269-s2097892,00.html

Overture-competitor FindWhat had a profit of $651,000 last quarter, compared to a loss of $2.3 million, for the same time last year.

The Cheering Fades for Yahoo
Yahoo, Nov. 12, 2001
http://www.fortune.com/indexw.jhtml?channel=artcol.jhtml&doc_id=204874

With advertising making up 80 percent of Yahoo's revenue, the company is struggling to find alternatives. This article looks at the challenges in Yahoo's three main areas: to charge consumers for services, to offer products to corporations and to reinvigorate marketers about advertising. I actually think they will be successful in convincing some people to pay for services. Regarding advertising, it's amazing to see that the introduction of an animated ad on Yahoo's home page is cited as a "turning point." Overture has just turned a profit, yet Yahoo remains seemingly ignorant of the value its own search results page could command. Want to get a paid listing on Yahoo's results page? Forget it -- you won't find any easy self-serve credit card based option, as you see with Overture or even Google. If Google can successfully balance paid listings and editorial content, then so could Yahoo.

Inktomi says news business, cost cuts key in Q4
Reuters, Oct. 18, 2001
http://biz.yahoo.com/rf/011018/n18280360_2.html

Inktomi has a pro forma loss $16.5 million for its last quarter, compared to $21.4 million for the same quarter the previous year.

LookSmart reports Q3 loss and lower revenues
Reuters, Oct. 25, 2001
http://biz.yahoo.com/rf/011025/n25289500_1.html

LookSmart has a loss of $10.2 million, compared to $12.9 million from the same time a year ago.

LookSmart Reports Third Quarter 2001 Results
LookSmart Press Release, Oct. 25, 2001
http://biz.yahoo.com/prnews/011025/sfth077_1.html

Listings sales at LookSmart generated $9.1 million last quarter compared to only $3.3 million for the same quarter last year. Listings continue to be LookSmart's main revenue stream, now. In comparison, advertising earned $5.2 million in revenue, compared to $19 million, for the same time periods. The company says it has $43 million in cash on hand and that despite the loss, it is now cash-flow positive.

Ask Jeeves reports Q3 loss, sales decline
Reuters, Oct. 31, 2001
http://biz.yahoo.com/rf/011031/n31190648_1.html

Ask Jeeves lost $27.5 million compared to $38.5 million for the same time the previous year. However, on a pro forma basis, the loss was $7 million, compared to $12.6 million a year ago. The company has about $80 million in cash, which is expected to last until it becomes profitable.

Ask Jeeves About Its Dismal Quarter
SiliconValley.internet.com, Oct. 31, 2001
http://siliconvalley.internet.com/news/article/0,2198,3531_914281,00.html

Ask Jeeves is also dissolving its joint venture with Univision Communications to produce Ask Jeeves en Espaqol.

InfoSpace Posts Loss, to Cut 200 Jobs
Reuters, Oct. 23, 2001

InfoSpace, which owns Dogpile and MetaCrawler, reported a pro forma loss of $9.6 million for last quarter, compared to a profit of $11.6 million for the previous year's quarter.


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