Kaufman Brothers cuts LookSmart (LOOK) to sell.
Analyst Richard Fetyko says he cut the Internet search-engine provider from hold, to sell, and cut the 4 cents 2004 earnings per share estimate to a 21 cents loss. He also cut the 7 cents 2005 earnings per share estimate to a 10 cents loss, based on news that Microsoft's MSN will not renew its contract.
Without MSN, Fetyko sees $55 million in 2004 revenues, vs. the $194 million previous estimate. He expects 2004 to be a messy transitional year for LookSmart as it searches for a new identity, redefines its strategic plans, cuts costs, and restructures its operations.
Fetyko thinks LookSmart could become a take-out target, and could fetch $1 per share based on its remaining business and technology. However, in the absence of a take-out scenario, he thinks LookSmart could trade closer to 40 cents earnings per share.