Search advertising network firm LookSmart Ltd. (NASDAQ: LOOK) reported fourth quarter and full-year 2011 results after markets closed yesterday. The company reported a fourth-quarter EPS loss of -$0.10, compared with a consensus estimate for EPS of $0.01.
The company’s CEO described the problem:
[S]everal customers were charged back with very significant settlements for traffic quality, a large portion of which was unrelated to LookSmart. Some customers discontinued their affiliate network business model and our revenue was impacted accordingly. Our net results were further negatively affected by receivable reserves related to those intermediaries whose credit worthiness has been severely impacted by this matter.
The intermediary business model experienced a significant change in the fourth quarter. We have ceased business with several of our intermediary customers and do not expect significant future revenue growth in this area. Our future growth will come largely from direct search advertisers, self-service search advertisers and other digital advertising models under development.
In other words, LookSmart’s old business model is now history and the company is trying to figure out what to do next.
Shares are down nearly -15% at $1.20 after posting a new 52-week low of $1.10 earlier. The 52-week range is now $1.10-$2.23.