LookSmart CEO Out

Jason Kellerman has stepped down as chief executive of LookSmart and relinquished his board member status, effective immediately. The board named Damien Smith, CEO of LookSmart’s Australian operation, as interim CEO while it conducts a search for a successor.

No one at the paid inclusion and pay-for-placement firm was immediately available for comment, but Kellerman’s departure is almost certainly linked to the considerable decline in LookSmart’s fortunes during 2003.

The severest blow to the company’s bottom line came in October, when biggest client Microsoft opted not to renew its licensing and distribution agreement for MSN. Further, LookSmart’s distribution agreement with Google expired last month and Yahoo’s Inktomi will stop using the service in February. The combined business losses led the company to initiate downsizing plans, including the impending layoff of half its staff.

Besides cutting costs, LookSmart has made moves aimed at shoring up its distribution, to at least partially make up for the loss of MSN. In October, the company launched a paid search listings product to complement its core paid inclusion business. In December, it combined the two products and automatically opted-in all of its advertisers to paid search listings.

The San Francisco-based search player’s woes didn’t begin with MSN’s snub last Fall. In May 2003, the company lowered its earnings forecast for the year, citing increased competition in the search marketing space.

It’s hard to explain so many bits of bad news during what was by all accounts a banner year for search engine marketing. However, for all LookSmart’s troubles over the past 12 months, the company tried to put a positive spin on Kellerman’s departure: “We appreciate Jason’s many contributions to the company culminating in our recent strong financial results,” LookSmart Chairman Evan Thornley said in a statement.

The company announced stronger than expected preliminary results for the fourth quarter, with revenues between $43 and $45 million. Of course, those fourth quarter numbers reflected LookSmart’s condition before its contract with MSN ran out in mid-January.

Interim CEO Smith will serve until the board settles on a replacement. Previously CEO of LookSmart Australia, he also held senior operating roles at Boral, an Australian building products company.

“Damian is a strong operational leader who has demonstrated success in building and re-building businesses for profitability. He has strong knowledge of all aspects of the company’s operations since joining the product development group in 1998,” said Thornley.

Like Smith, departing CEO Kellerman led the company’s Australian operation. Further recruiting from down under is unlikely, however, considering LookSmart recently sold the assets of its Australian division to its yellow pages business partner, Sensis. That liquidation follows the closure of its U.K. operations.

“The team and I are now completing the restructuring of the company to align our operations with the significant reduction in revenue expected,” said Smith. “LookSmart has made several successful business transitions in our history and we are committed to rebuilding the business to generate long-term profitability.”

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