Overture Shares Fall on Revised Outlook

NEW YORK Shares of Overture closed on the Nasdaq at $11.49, down $4.99 or 30 percent Thursday, a day after it reported first quarter earnings and reduced its full-year forecast.

For the full year, the provider of pay-for-performance search to Web sites said it now expects earnings of $22-26 million, or 35-42 cents a share. Analysts were projecting earnings of 63 cents in 2003. Overture said it continues to anticipate a 50 percent year-over-year revenue boost to more than $1 billion in 2003.

The company blamed the revised outlook on lower revenue in the U.S. pay-for-performance service, higher-than-expected traffic acquisition costs, and increased technology and infrastructure expenses.

For the first quarter, revenue rose 57 percent to $224.7 million from $142.8 million in the year-ago quarter.

The Pasadena, Calif.-based company attributed the revenue rise to significant growth in paid introductions (when a user clicks on an advertiser’s listing). Overture facilitated 608 million paid introductions between advertisers and consumers in the first quarter, compared to 587 million in Q1 2002 and 563 million in Q4 2002.

Also, Overture said advertisers continued to increase the amount of their keyword bids; advertisers paid Overture an average of 37 cents for each paid introduction during the first quarter, versus an average of 24 cents in the year-earlier period and 35 cents in the fourth quarter.

Q1 net income reached $11.1 million, or 18 cents a share, compared to net income of $29.3 million, or 48 cents per share, during the same time a year ago. Excluding a onetime credit of $3.9 million ($2.4 million, net of taxes) due to a reduction in the final arbitration award associated with the InternetFuel dispute, Q1 net income was $8.8 million, or 15 cents per share.