Updated from April 29 Shares of LookSmart ( LOOK) sagged 10% Friday after the company reported solid earnings and agreed to push into the online content filtering business. Late Thursday, LookSmart posted a narrower-than-expected loss in the first quarter and raised full-year guidance. The company also agreed to acquire Net Nanny for some $5 million in cash and stock from privately held BioNet Systems LLC. Net Nanny is the world's leading brand name in consumer online filtering, LookSmart said. "This acquisition is both strategic and prudent for LookSmart," said Damian Smith, LookSmart's CEO. "Strategic, because integrating our search technology into Net Nanny provides a stronger product for their users, while also providing LookSmart with a desktop platform from which to launch high margin search and paid listings applications. Prudent, because Net Nanny is expected to produce positive margin contribution for LookSmart in 2004." Investors didn't agree. On Friday, the stock slid a quarter to $2.19. The Internet company lost $7.1 million, or 7 cents a share, in the latest quarter, compared with a profit of $1.1 million, or 1 cent a share, last year. Revenue fell to $27.8 million from $33.4 million last year. Excluding stock compensation and a restructuring charge, the company lost $7.1 million, or 7 cents a share, in the latest quarter. On that basis, analysts were forecasting a loss of 9 cents a share on revenue of $20.6 million. For the second quarter, LookSmart expects to report an adjusted loss of $6 million to $7 million on revenue of $18 million to $20 million. Analysts had been expecting revenue of $12.5 million. For the full year, the company expects to report an adjusted loss of $20 million to $22 million on revenue of $76 million to $81 million. Analysts had been forecasting revenue of $55.4 million.