Marchex Slips on 4Q Loss
Friday February 23, 12:52 pm ET
Marchex Declines on 4Q Loss, but Some Analysts Say Gains Are Imminent in 2007
NEW YORK (AP) -- Shares of Marchex Inc. tumbled on Friday after the search marketing services company fell to a fourth-quarter loss as expenses rose and advertising services revenue remained sluggish.
Marchex reported a loss of $563,061, or a penny per share, compared to a profit of $1.7 million, or 3 cents per share, a year earlier. Stripping out one-time items, the company earned 13 cents per share in the quarter, topping Wall Street's consensus view by 1 cent per share, according to a poll by Thomson Financial.
Revenue grew 9 percent to $32.6 million from $29.8 million in the year-ago period, but fell shy of Wall Street's target of $34.1 million in sales.
Operating expenses jumped 16 percent to $32.1 million from $27.6 million a year ago. The company also said advertising services revenue was slow due to lower spending from certain advertisers.
Looking ahead, Marchex forecast 2007 revenue between $144 million and $150 million -- up from the $127.8 million booked in 2006. Wall Street is looking for sales of $147.4 million.
Piper Jaffray analyst Safa Rashtchy, who maintains a "Market Perform" rating on the shares, said that although quarterly revenue missed analyst expectations, Marchex has a strategy for boosting sales growth in 2007.
"The strategy is promising and has a good chance of success, in our view, but given the rapid deceleration of the last three quarters, we believe that investors will wait for at least the first signs of success which are unlikely to come much before late in the second quarter," Rashtchy wrote in a client note.
ThinkEquity Partners analyst Stewart Barry kept a "Buy" rating on the shares pointing to several possible catalysts in 2007, including the launch of Yahoo's Panama service and the company's plan to integrate its open list search platform with 100,000 of its network sites by the end of the first half of 2007.
"We continue to believe Marchex is a second half of 2007 story as growth should reaccelerate and the company should complete integrating Open List with most of its 200,000 Web sites by the end of the year," Barry wrote.
Sunnyvale, Calif.-based Yahoo's Panama is an upgrade to the site's search engine designed to stimulate advertising revenue. The new system matches ads related to search queries and allows Yahoo to earn more by charging each time a user clicks an ad. |
