It's possible to be rich in virtual real estate, but poor in performance. Shares of Marchex (NASDAQ:MCHX) opened 22% lower this morning, after the company posted lackluster second-quarter results and lowered its guidance for all of 2007.

Despite growth initiatives at its 200,000-website empire, revenue inched just 9% higher, to $34.7 million. The company posted a profit of $0.01 per share, or $0.10 a share if you back out share-based compensation expenses. Wall Street was looking for adjusted earnings of $0.11 a share on a 17% uptick in sales.

It wasn't pretty. Even with higher revenues, Marchex suffered a dip in adjusted EBITDA and operating earnings before amortization. In short, the company wasn't able to milk as much out of its domains as the market felt it should have.

Yes, Marchex still managed to generate 40 million revenue-generating leads during the quarter. It also attracted 31 million unique visitors to its websites -- which include juicy names like,, and -- in June. It wasn't enough.

Marchex also disappointed investors by reducing its outlook. It's now looking to generate between $136 million and $142 million in revenue this year, $8 million below its original top-line range. Operating income before buyout-related amortization charges will now be clocking in between $21 million and $25 million. It had initially forecast as much as $38 million there.

The company extended its paid-search contract with Yahoo! (NASDAQ:YHOO) for another two years, though it's also crediting Yahoo!'s recent quality-based pricing initiatives for part of this year's projected shortcoming. Marchex also announced the purchase of call-based advertising specialist VoiceStar, and the appointment of Bill Day as the company's chief media officer.

Day's appointment should be a good one. He was CEO of New York Times' (NYSE:NYT), the guru-led resource site that may inspire some compelling content-creation initiatives at Marchex. The company has begun to unlock the value of many of its domains by populating them with more dynamic content than the old parking-page mindset. A seasoned visionary like Day should be able to pump up the properties further.

This kind of optimism may feel inappropriate to some. The stock dipped into single digits this morning, levels that it hasn't seen in nearly three years. However, Marchex has come a long way since then. It's no Yahoo! or Google (NASDAQ:GOOG), but it is generating too much traffic to ignore as a buyout candidate, if the shares continue to weaken. Patient investors may have to wait until 2008 for the bottom-line production that Marchex is capable of generating, but impatient speculators may not want to wait to see whether the shares can head lower.   

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Longtime Fool contributor Rick Munarriz may have a soft spot for Marchex -- singling it out in Stocks 2007 -- but he does not own shares in any of the companies in this story. He is also part of theRule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.