LookSmart Ltd said this week it wiped almost $40m of debt off its balance sheet by winding up its joint ventures with BT Group Plc in the UK and Japan. The closure of BT LookSmart reportedly will cost up to 50 jobs.
The San Francisco-based paid-inclusion search engine firm said it will continue to operate in both markets by itself, combining some of the assets of the old venture while realizing cost efficiencies from the cuts.
Under the terms of the deal, BT gets $3.5m in cash and a million shares of LookSmart common stock (worth about $2.4m). LookSmart will also pay BT $1.5m in cash it had set aside to fund the ventures.
LookSmart said it gets all the debt associated with the venture resolved, leaving it substantially debt free CFO Dianne Dubois said. She added that the restructuring will have a positive impact on fourth quarter earnings but no impact on early 2003 earnings.
The joint venture was formed in the UK in November 1999. BT is currently looking at reducing its exposure to unprofitable internet businesses. LookSmart is struggling to achieve profitability in the face of competition from other paid inclusion firms.
In related news, Overture Services Inc announced it has officially launched its service in Japan, as touted for some time. The company already has a deal with Yahoo! Inc in Japan to provide listings to its local portal there, and is testing its service with MSN Japan.