Shares of InfoSpace Inc. sank Thursday after the online search engine operator said its first-quarter loss widened as a large impairment charge and increased operating expenses overshadowed revenue growth.
Late Wednesday, the Bellevue, Wash., company said its first-quarter loss totaled $2.8 million, or 8 cents per share, compared with a loss of $540,000, or 2 cents per share, in the year-ago quarter.
Revenue rose to $42.2 million from $35.9 million.
In a conference call InfoSpace Chief Financial Officer David Binder said the company experienced growth in its distribution segment, which includes revenue from Web search and advertising services provided to other companies.
Analysts polled by Thomson Financial expected a profit of 2 cents per share on $36 million in revenue. The estimates generally exclude one-time items.
InfoSpace reported a $6.7 million impairment charge from its investments in auction rate securities. It also said its operating expenses rose 14.7 percent to $39.6 million, due mostly to a sizable increase in content and distribution expenses.
InfoSpace expects a second-quarter net loss of $400,000 to $1.9 million, or a penny to 6 cents per share, on $34 million to $36 million in revenue.
Analysts expect a profit of a penny per share on $35.4 million in revenue.
In a client note, RBC Capital Markets analyst Ross Sandler raised his price target for the stock by $1 to $14. He rates the stock "Sector Perform."
The analyst said he is "encouraged by the first-quarter progress" but is "cautious about the long-term sustainability of the affiliate revenue (especially amidst Google's ongoing cleanup effort and a competitive environment for distribution deals)."
InfoSpace shares fell $1.60, or 13.2 percent, to $10.47. In the past year, the stock has traded between $8.14 and $26.23.
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