LookSmart (LOOK) Bombs: Bad News for GOOG/YHOO?

LookSmart had a terrible quarter, with advertising revenue growing only 4% year over year (this is Internet, remember, not TV).  It also stopped providing guidance (presumably because it doesn’t have anything good to say).  Most of Looksmart’s problems are Looksmart’s problems, but the broader concern is that there is market-weakness involved as well…

When the Internet ad market cratered in 2000, the canaries in the coal mine were weak results from the 3rd-tier players.  At the time, most analysts dismissed these problems as company specific.  In fact, they were a sign that the Internet tide was no longer rising fast enough to lift all boats.  The weakest ones sank first.  Then, three-to-six months later, when the tide stopped rising and started to fall, all the others sank, too.

Looksmart is frantically in search of a business, so it’s troubles may be its own.  But this news, combined with tepid growth from Microsoft, weak growth from AOL, CNET, and TSCM, NYT seeing weak retail ads, and concern from News Corp, add to the growing body of evidence that there’s more at work here than company-specific problems or a shift from premium to performance-based ad spending.

Looksmart CEO:

“Third quarter revenue results were adversely impacted by continued volatility in ad spend among our larger volume advertisers.”

“Volatility,” we assume, is a euphemism for “cutbacks.”

See Also:
LookSmart Not Responsible for Google’s 7% Plunge
Recession Watch: Stocks, NWS, AOL, Toll Brothers
What Happens to Google and Yahoo in Recessions

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