LookSmart Search Engine Losing Two More Partners

Sprinks and Inktomi, now owned by major search competitors, plan to drop LookSmart's search listings as the company prepares to lay off half its staff.

LookSmart Ltd. is losing two more distribution partners and planning to slash half its work force as it struggles to regroup from the loss of Microsoft Corp.s MSN portal as its largest search customer.

Neither Sprinks nor Inktomi Corp. is planning to renew their agreements with LookSmart to use its search listings, said Dakota Sullivan, LookSmarts vice president of marketing. The two customers together accounted for 5.7 percent of LookSmarts listings revenues in the third quarter of this year, and the loss will come at about the same time as MSNs Jan. 15 cutoff of LookSmarts listings. MSN has accounted for two-thirds of LookSmarts listings revenues.

The contract with Sprinks, now owned by Google Inc., was supposed to expire on Thursday while the agreement with Inktomi, which was recently acquired by Yahoo Inc., expires on Feb. 24, according to a filing LookSmart made this week with the Securities and Exchange Commission.

LookSmart also is planning to cut half of its employees as part of a restructuring taking place during the current quarter, which ends Dec. 31, and the first quarter of 2004, the filing stated.

Sullivan declined to offer further details about the restructuring plan, saying that LookSmart CEO Jason Kellerman will share more information about it and LookSmarts strategic direction in late December or early January when the company offers guidance on its fourth quarter earnings.

Already, LookSmart has told clients that it will be closing its United Kingdom office in London as of Jan. 15, Sullivan said. LookSmart, with headquarters in San Francisco, has other offices in Los Angeles, New York and Detroit in the United States; Melbourne and Sydney in Australia; Montreal in Canada; and Tokyo in Japan.

"It was almost exclusively an office devoted to serving MSN… so it was not necessary to keep the office opens," Sullivan said of the UK operation.

The search market has become increasingly competitive with Google aggressively expanding its search advertising offerings and Yahoo acquiring a strong of companies along with Inktomi, including top search-advertising provider Overture Services Inc. Microsoft also has begun developing its own search engine technology, widely expected to be used on its MSN Search site.

On the other hand, LookSmart earlier this week announced that it had gained three new customers for its new pay-for-performance search service that it launched in October as a competitor to services from Google and Overture. Web sites SearchFeed, myGeek and ABCSearch joined the service, called LookSmart Sponsored Listings.