It’s been a bit of a struggle for Irvine-based search engine Local.com Corp.
The company, which connects advertisers with people looking for products or services in a specific region, flourished in 2004 when it launched its initial public offering as Interchange Corp. and saw its stock surge. The shares hit the skids after that and have been slow to recover.
Local.com recently landed an $8 million investment from Hearst Interactive Media, the Internet arm of media giant Hearst Corp., which owns the San Francisco Chronicle, Cosmopolitan magazine and iVillage.com.
Hearst Interactive invests in and manages a number of development-stage companies.
Local.com plans to use the cash for working capital and marketing, according to Chief Executive Heath Clarke.
“Hearst’s investment in Local.com is a welcome endorsement of our long-term strategy by one of the largest media companies,” Clarke said.
Local.com will use Hearst’s background and knowledge to “ultimately accelerate the development of our own business,” he said.
The company’s revenue in the fourth quarter climbed 6% to $3.6 million. And, with the help of the Hearst deposit, Local.com ended the year with $3.3 million in cash and no debt.
Still, the company reported a net loss of $3.2 million for the quarter, about the same as a year earlier. It saw a $13.3 million loss in 2006, double that of 2005. The forecast for the current quarter calls for a $3.5 million loss.
There has been significant progress made, Clarke said. Local traffic revenue grew 350% to $2.7 million.
“Our organic traffic nearly doubled, visits per user grew, our technology improved significantly and we introduced two new advertiser products,” Clarke said.
The company’s market value has grown to about $45 million, up nearly 20% from the start of the year.
Earlier this month, Local.com backed out of a $9 million cash and stock offer for soUno Directional Media Solutions LLC, an online yellow pages site. The deal, announced in January, would have brought 13,000 advertisers with it.
“We are continually refining our ad products, ad delivery systems, search engine marketing and advertiser acquisition strategies,” Clarke said. “Based on thorough due diligence and analysis, it became clear to us that at this time it is in the best interests of our company and shareholders to invest our capital into our own advertiser acquisition capabilities.”
The company said it has seen a big jump in advertisers since launching LocalPromote in October. It now counts about 600 clients, Clarke said.
Gloom and Doom
There’s no predicting the weather: Just when it seems the clouds hanging over Aliso Viejo-based Quest Software Inc. have cleared, more rain swoops in.
The maker of software that monitors the performance of databases and other programs is second only to Irvine’s Broadcom Corp. among local companies swept up in stock options backdating.
Now Quest has received a second notice from Nasdaq that it could be delisted if it fails to pony up with its revised financial statements. The company has said it will need to restate earnings to correct backdated options granted from 1998 to 2002.
Quest has estimated it’ll take a $150 million charge.
While the company’s internal review continues, it hasn’t filed financials for the third and fourth quarters, and incomplete financials for the second quarter.
Nasdaq is getting a little impatient. Quest has asked for more time.
Last fall, M. Brinkley Morse, the former chief financial officer, resigned rather than be interviewed by an internal audit committee. He handled all of the company’s investments and acquisition strategy since 2005. The committee found no other wrongdoing but repriced more than $1.5 million in options granted to executives, including Chief Executive Vinny Smith, to eliminate “actual and potential benefits.”
New Face
Western Digital Corp., the Lake Forest disk drive maker, is getting a familiar face to its board. Thomas E. Pardun has been named chairman, starting April 1.
Pardun, 63, replaces Matt Massengill, who was executive chairman and plans to remain a director.
Massengill, 45, was chief executive of Western Digital from 2000 to 2005 and was elected chairman in 2001.
It’s Pardun’s second stint as chairman. He first was elected to the board in 1993 and served as Western Digital’s chairman from 2000 to 2001.
Pardun retired in 2000 as president of MediaOne Group Inc. He also had stints with US West Multimedia Communications Inc., which was bought out by Qwest Communications Inc. in 2000, as well as what’s now Sprint Nextel Corp. and IBM Corp.
