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LookSmart has chopped a third of staff after announcing it will miss Q4 targets.

The dotcom directory said it expected sales of $30 million to $31 million for the quarter, down on its previous estimate of $33 million to $36 million. It forecast a loss of between 14 and 15 cents, from previously expected losses of 12 cents.

In an effort to save $44 million per year, it will turn eleven operating groups into four, and cut 172 employees worldwide. It will also take a one-time charge this quarter.

The San Francisco outfit said it would quit non-core activities and pump its efforts into its listings businesses - which have pulled it $10 million in their first three quarters.

"The trends we identified in our prior guidance proved to be true both positive and negative," said LookSmart chairman and CEO Evan Thornley. "Untargeted advertising is declining while highly targeted online direct marketing is growing rapidly. However in the fourth quarter, the parts of our business that were weakening did so faster and to a greater degree than expected."

"At the same time, our highly targeted listings businesses grew over 40 per cent from the third quarter despite very negative industry trends."

LookSmart is due to report earnings on January 25.

Earlier this week online search and directory giant Yahoo! cut earnings forecasts for Q1, citing an anticipated dotcom ad sales slump. ®

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