FindWhat Surges After Third-Quarter Beat - TheStreet

FindWhat Surges After Third-Quarter Beat

The pay-for-placement search engine sails higher after swooping past estimates.
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Updated from Oct. 20

FindWhat.com

(FWHT)

shares rose 5% Tuesday after the Web company beat its third-quarter guidance.

The pay-per-click search-engine operator -- a distant competitor to

Yahoo!'s

(YHOO)

Overture Services and the privately held Google -- reported revenue of $17.8 million in the quarter ended Sept. 30, up from $11 million in the third quarter of 2002.

Net income, according to generally accepted accounting principles, amounted to $2.8 million, or 12 cents per diluted share, compared with $1.8 million, or 9 cents per diluted share, in the third quarter of 2002.

FindWhat.com's shares, which were trading around $3 a year ago and hit a 52-week high of $27.94 last month, added 91 cents to $18.01 Tuesday morning.

The stock's postclose performance, along with its impressive rise over the past year, reflects the market's ongoing interest in companies whose businesses are based on one of online advertising's growth areas over the past few years -- paid search, in which advertisers bid for listings among Internet search results, and usually pay only when Internet users click on their listings.

With the company raising its full-year EPS guidance from 48 cents to 50 cents per share, FindWhat.com's shares are trading north of 35 times 2003 earnings projections.

On a conference call with analysts, FindWhat.com Chief Operating Officer Phillip Thune said the company would cease reporting certain statistics it has in the past, such as average revenue per click-through. The change, he said was due not to poor performance -- those statistics, he said, were similar to what they were in the second quarter of 2003 -- but to business changes that made such statistics less illuminating.

FindWhat.com still faces uncertainty over the deal it announced in June to merge with the privately held European paid search firm, Espotting Media. Last month FindWhat.com said it was renegotiating the terms of the agreement. At issue appear to be Espotting's past and future financial results, according to comments made on the call by FindWhat.com Chief Executive Craig Pisaris-Henderson. "It is our intention to move forward," he said, "to try to come to agreeable terms."

Pisaris-Henderson said management of both companies were trying to reach a deal, but it remained possible that a merger might not be consummated.

Two distribution partners in the latest quarter accounted for more than 10% of FindWhat.com's business apiece.