Looksmart aren't looking good

Shares of LookSmart shed 79 cents, or 21%, to $3.01 on Nasdaq. The company said Microsoft’s MSN has been testing various options on its United Kingdom search page to determine the impact of eliminating or replacing most of the company’s directory listings supplied by LookSmart.

In a note Friday, US Bancorp Piper Jaffray analyst Safa Rashtchy said that he believes MSN will renew its agreement with LookSmart “but the major unknown factors are the level of implementation of the company’s listings on MSN’s page, which could determine the total revenue generated for LookSmart, and the revenue-share agreement.”

If Looksmart lose MSN as it seems likely (they don't test the impact of removing listing for the sake of it) or their revenue reduces drastically due to greatly reduced exposure of Looksmart sponsored results, what's left for them?

Hardly surprising the shares took a tumble. If you are considering a looksmart listing you might be wise to wait a bit :-)

I would count them out yet though, they've gotten smart by shared crawling - I suspect their archive will be at Google's level by mid next year.