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Updated from Feb. 5



outshined top-line expectations Thursday, but its shares took another beating as investors mulled weak guidance.

For the quarter ended Dec. 31, the Net search operator posted a break-even quarter, going by so-called adjusted net income, which included a $4.2 million restructuring charge. Sales for the quarter were $44 million, a 41% increase over the year-ago period.

LookSmart's GAAP net income for the fourth quarter was $1.6 million, or a penny per diluted share.

Wall Street had expected net income of 2 cents per share on $40 million in revenue.

Looking ahead at the first quarter, LookSmart expects a net loss of $13 million on sales of $17 million. That is within analysts' expectations, according to a Thomson First Call tally. But for the year, the company expects a net loss of $28 million on total sales somewhere between $45 million and $50 million. That's at the low end of expectations.

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Shares of the San Francisco "pay-for-placement" Internet search business, which had closed up slightly at $1.86 Thursday, dropped 14% to $1.60 Friday morning.

"We are very pleased with our fourth quarter results, which significantly surpassed expectations outside of restructuring costs," said Damian Smith, LookSmart's interim chief executive, in a press statement.

LookSmart's prospects dimmed in October when Net service provider




ended its contract with the company. That move sent the stock down 58% in a single day. Since then, LookSmart has been in the hunt for new opportunities.

"We intend to draw upon our history of successfully developing early stage search opportunities to deliver innovative and profitable solutions within underserved but appealing sectors of the search market," chief Smith said.

The company says it has $70 million in cash as of Dec. 31 and expects to have $60 million by the end of March.