Inuvo Inc (INUV) 2008 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the MIVA fourth quarter and full year 2008 financial results conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the conference over to Mr. Alex Vlasto. Please go ahead.

Thank you, and good afternoon. Welcome to MIVA's fourth quarter and full year 2008 financial results conference call. Joining me on the call today are President and Chief Executive Officer, Peter Corrao, and Chief Financial Officer, Mike Cutler.

I'd like to remind everyone that today's comments include forward-looking statements. These statements are subject to risks and uncertainties that may cause actual results and events to differ materially from those expressed in the forward-looking statements. These risks and uncertainties will be outlined at the end of this conference call and also detailed in MIVA's filings with the Securities and Exchange Commission.

To begin, let's review how we our measure our financial performance. In addition to the standard GAAP measurements, we utilize certain profitability base metrics to evaluate our period to period and year-over-year performance. They are adjusted EBITDA, adjusted net income straight loss, and adjusted net income straight loss per share. We believe the adjusted EBITDA, adjusted net income straight loss, and adjusted net income straight loss per share provide meaningful measures for comparison of the Company's current and projected performance with its historical results due to the significant increase in non-cash amortization that began in 2004, primarily due to certain intangible assets resulting from mergers and acquisitions.

MIVA defines adjusted EBITDA as EBITDA, earnings before interest, income taxes, depreciation and amortization, plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business. MIVA uses adjusted EBITDA is an internal measure of its business, and believes it utilizes an important measurement of performance by the investment community.

MIVA sets goals and awards bonuses, in part, based on performance relative to adjusted EBITDA. MIVA defines adjusted net income straight loss as net income straight loss plus amortization and non-cash compensation expense, plus or minus certain identified revenue or expense that are not expected to recur or be representative of future ongoing operation of the business. In each case, including tax effects, if any, of the adjustment, MIVA defines adjusted net income straight loss per share as the adjusted net income straight loss as previously described, divided by the average basic or fully diluted number of outstanding shares of MIVA common stock over the reported period.

For a detailed review of our fourth quarter and full year 2008 results, including the corresponding GAAP financial measures and a reconciliation of our non-GAAP financial measures to GAAP financial measures, please refer to the press release we issued today and to our form 10- K for the fiscal year ended December 31, 2008, filed with the Securities and Exchange Commission.

To comply with the SEC's guidance on fair and open disclosure, we've made this conference call publicly available by audio web cast through the Investor Relations section of our website and replay of the conference call will be available for 90 days after the call. I would now like to turn the call over to our President and CEO, Peter Corrao.

Thanks, Alex, good afternoon, everyone and welcome to today's call. We appreciate having you on the call with us.

Before I discuss our Company's performance and outlook, it's my pleasure to introduce you to our new CFO, Mike Cutler. Mike has been with me since 2006 as our Senior VP of Finance and Chief Accounting Officer. Before joining MIVA, Mike was for two years CFO at NASDAQ listed voice, video and broadband provider, WBG Communications. He has also held senior financial posts at companies including Gibraltar Steel and SBC Ameritech. Mike worked closely with our former CEO and COO, Lowell Robinson, and has a deep understanding of our financial operations. I'm looking forward to working alongside him as we enter this exciting new phase of our Company's development. Mike's promotion to CFO follows the departure of Lowell. Lowell made a significant contribution to our business since he joined in '06. He worked with me and our board in developing and executing our turn around strategy.

I want to thank him for his financial and business leadership, and we wish him the very best of luck with his future endeavors. Since our last quarterly call in November, there have been significant changes to our business and I want to start this afternoon by taking you through these changes and highlight any opportunities that I believe they present for us.

On March 12, '09, we announced the completion of an asset sale of our US and EU media operations, the advertising network Adknowledge. The transaction was for cash consideration of approximately $11.6 million plus assumptions of certain balance sheet liabilities and subject to certain retained assets and liabilities and post-closing adjustments. Our long-stated Company strategy has been to transition out of our third party media adnetwork and into our high margin consumer-oriented MIVA Direct business, and the sale of MIVA Media marks the exciting final step of this process.

Following the transaction, we've reduced head count from 129 people as of December 31, '08, to approximately 50 people today, which includes the transfer of approximately 75 of our own staff to Adknowledge. Our main team works almost exclusively out of our New York City office with a very small number remaining in our Fort Myers, Florida office. Importantly, the transaction has increased our cash and cash equivalents, and we believe that we now have sufficient capital to execute an expansion strategy for MIVA Direct. I'll talk about this in detail later on this call.

so today, our newly streamlined business is completely focussed on our miva direct and, specifically, our ALOT tool bars, home page and desktop products. It is worth highlighting in the full year 2008 allocation of corporate costs -- excluding rather allocations of our corporate costs, are US and EU media operations had an EBITDA loss on revenues of $75 million. Compared to MIVA Direct which delivered positive EBITDA of revenues of $41.3 million. While this is not representative of an overall Company performance, we believe the contrast in divisional performance in '08 validates our transition strategy and underlines the opportunity that exists following the sale of our media operations.

As a result of this transaction, we will be renaming our Company in the coming months, our intention is to rename our existing MIVA Direct division to ALOT. com, to underline our confidence and commitment in that brand. Our corporate entity will also be renamed from MIVA, Inc. and this will result in our name and NASDAQ ticker symbol being changed. I look forward to sharing the details of our new identity with you once we've finalized our renaming and rebranding process.

Let me move on now to discuss our results for the fourth quarter and full year '08. '08 was a key year in our turn around efforts, and was the year in which we right sized and restructured media operations, in particular, MIVA Media Europe. In connection with that restructuring, we went then to position the MIVA Media business for sale. A year in which we continued to innovate with MIVA Direct and put in place the fundamentals that we would believe will be the growth drivers for our new streamlined business.

Among the key milestones for 2008 were stabilizing our US MIVA Media business despite a challenge in economic climate, continuing the vertical expansion of our ALOT product suite, launching an exciting new version of our customizable home page product, launching ALOT buttons, our online widget library through which we can customize -- through which consumers can fully customize their ALOT product. Releasing the beta version of our ALOT desktop product which allows users to conduct web searches and display their favorite content directly on their computer desk tops. And undertaking a major restructuring program amongst MIVA Media EU.

Revenues for the fourth quarter and full-year 2008 were broadly in line with the forecast we presented on our last quarterly call. Revenue declined from $149.1 million in '07 to $116.4 million in '08, and our EBITDA loss increased from $27.9 million in '07 to $36.1 million in '08. I believe it's important to look at the fundamentals behind these numbers, and I'm going to focus this afternoon specifically on MIVA Direct, it being our continuing operations.

The decrease in MIVA Direct's revenue from 10.4 million in Q3 '08, to $8.6 million in Q4 '08, and the resulting year-on-year decreases in full-year revenue from $51.9 million to $41.3 million in '08, was primarily as a result of reduced advertising spend in the second half of '08, which limited our ability to acquire new toolbar, home page and desktop users. I want to take some time to explain this in more detail, not only to give clarity to Q4 '08 results, but also because ad spend will become an increasingly important barometer as we now focus our operations exclusively on expanding our ALOT product portfolio for the remainder of '09.

As a reminder, our primary channel for acquiring new ALOT toolbar, home page, and desktop users is direct response advertising. As I've mentioned on previous calls, we believe we developed a model that enables us to cost effectively acquire high value users for each of our ALOT products. Once we acquire new users, we generate revenue from them primarily through, but not exclusively, through type and search. We have agreements in place with two of the world's largest search engines who provide us with web, image and new search results, as well as associated paper Pay-Per-Click ads. We then generate a share of revenue when users click on these ads. To give you some context , in December 2008 users of our products conducted over 76 million searches.

In addition to the high value type and search, we also generate revenue through third-party agreements we have in place with contract providers, such as Reader's Digest, Star Pulse, Better Homes and Gardens, to name a few. These contract providers pay us for traffic we deliver to their websites through co-branded tool bars and sponsored widgets that we develop for them and distribute then to our users. As with all sales cycles, it takes a period of time for us to generate return on our advertising spend, and it is this lag that we believe impacted revenue from MIVA Direct in the fourth quarter of '08.

Our focus on cash conservation as we move closer to finalizing the MIVA Media sale impacted the amount of ad spend we could commit to MIVA Direct. Ad spend consequently decreased from $7.2 million in Q2 '08 to $6.5 million in Q3 '08,and all the way down to $5.2 million in Q4 '08. These decreases directly correlated with the number of live users of our tool bar product which decreased from 5.6 million at the end of Q3 '08, to 4.6 million at the end of Q4 '08, and approximately 3.8 million on the day we completed the sale of MIVA Media.

The nature of our MIVA Direct business means that the impact of these custom ads can be felt for several months after the event. So the cuts that were made in Q2, Q3, impacted revenue Q4 of '08. In the same way, we expect the effect of our Q4 2008 ad spend to have an adverse impact on revenues through the early part of '09. We made further ad cuts for a portion of Q1 '09, and we expect to have similar impact on revenues through early '09.

Despite this, however, and importantly, I'm excited to report with the sale of MIVA Media now complete, we believe now we have sufficient capital to execute on a sustainable growth strategy for our ALOT products. The more sustainable model should remove the peaks and troughs in MIVA Direct's revenue that we've had to endure throughout the majority of '08. The model shows us increasing ad spend steadily from $4.4 million in in Q1 '09 to $9.2 million in Q4 '09. We expect this ad spend will result in us increasing our active tool bar users by over 70% in '09, from 4.6 million at the end of Q4 '08, to approximately 8 million at the end of '09.

We expect users of our ALOT home pages and desktop products to also increase in line with our tool bar users. Already today and importantly around a third of our revenue within MIVA Direct comes through our home page and desktop products, and we expect this to continue to increase over the course of 2009. We expect the increased users acquired through our growth strategy to deliver increased type and search and, in turn, to increase revenue, and it's on that basis of the model that we are forecasting EBITDA profitability for our continued operations for 2009.

We've been encouraged with the earlier results of this new growth strategy, and I look forward to updating you as we progress over the coming quarters. Now let me focus again on our results for Q4 '08.

Despite the decrease in ALOT spend in Q4 '08, we continue to drive forward with innovation across the ALOT product portfolio, as I mentioned briefly in our call a little bit earlier. Throughout Q4 '08, we continue with the vertical expansion of our ALOT portfolio. We now offer 60 vertically oriented tool bars and 36 vertically oriented home pages. This vertical strategy enables us to tap into the long tail of advertising inventory which, in turn, increases the efficacy of our on-line ad spend. While our tool bars and home pages are marketed and packaged across specific verticals, they can also now be fully customized through our new ALOT buttons widget library, which I introduced to you in our last quarterly call. ALOT buttons are hosted on our website, where we host all of our available widgets and products. That website is ALOT.com. These widgets which range from five-day weather forecasts and latest celebrity gossip, can be added to both our tool bar and home page products, and are designed to increase retention rates and further broaden the appeal of our various products.

The level of customization offered through ALOT buttons was cited as one of the key reasons our tool bar products received a full five-star quality rating when reviewed by CNET just in February of 2009. Throughout Q4 '08, we continued to add new widgets to the ALOT buttons library. There are currently over 500 available, and we expect to continue to add to this site over the course of 2009. In December of 2008, we also announced the beta launch of our new ALOT desktop product. This product enables users to conduct web searches and display their favorite contract directly from computer desk tops. MIVA Direct has traditionally been known as tool bar company. However, with the launch of ALOT buttons and ALOT desktop and expansion of our home page product, we believe we have significantly expanded the scope and appeal of our product offerings. Increasing the number of touch points we offer our users, increases the opportunities we have for generating high value type and search.

We believe our ALOT brand has significant potential for expansion, not only across new verticals, but across other channels, such as mobile, and we continue to be looking closely at these opportunities throughout the course of 2009.

Now, before handing over to Mike, I want to talk briefly about our corporate costs and our cash position. Throughout 2008, we focussed on reducing our corporate costs, and as I mentioned on previous calls, following the sale of MIVA Media, we made further reduction in our corporate head count. We transferred 10 of our corporate staff to Adknowledge, and are left today with a corporate team that now compromises only CEO, CFO, legal and admin functions. Our new Company is operating off a significantly reduced cost base, and we expect this to result in savings above corporate and public company costs.

On December 31, 2008, cash and cash equivalents were $6.7 million. The balance included a $4 million draw-down from our line of credit with Bridge Bank. The decrease in cash from $11.2 million in Q3 2008 was part of the attributable to a number of one-time costs, including $1.9 million for the Comet Systems litigation settlement. $600,000 for the Tiscali litigation settlement, and approximately $2 million in continued EU restructuring costs. Let me emphasize again, with these one-time costs now behind us, and with the proceeds of the sale of MIVA Media, we believe we have significant capital position that we believe will not constrain our growth strategy for 2009.

So in summary, I believe 2008 was a critical year for us. We took the steps that we believe we needed to take in order to conserve cash and position our media business for a sale. We continued to innovate with MIVA Direct business from both a product and technology perspective. I believe with our strength in capital position, our newly streamlined team, our breadth of industry-leading products, and our proven expertise in customer acquisition, that we're in a stronger position to succeed in our expansion plan, and we expect to deliver again EBITDA profitability for 2009.

I look forward to updating all of you on our progress over the Company quarters. With that said, let me turn the call now over to

Thanks, Peter. Before I get started, though, let me just point out a correction that needs to be made to our recently issued earnings statement. On the last page for the balance sheet, there is a typo that has to do with the headline year. It should read 2008 and 2007, respectively, instead of 2007 and 2006, and you should know that we're going to issue a corrected earnings release shortly. Having said that, I just want to let you know I'm excited to be taking over as MIVA's CFO at such a pivotal point in our Company's history. I look forward to keeping our shareholders and other stakeholders up to date with our financial performance throughout 2009 and beyond.

As Peter mentioned, 2008 was an extremely important year in our Company turn around. Over the course of the year, and in particular through the fourth quarter, we worked diligently to position MIVA Media for sale as we continued to innovate across our ALOT product portfolio. From a finance and accounting perspective, the sale of MIVA Media earlier this month dramatically streamlines our operations. We are going from a business with thousands of advertisers and publishers to one with smaller number of high value vendors. This new streamlined structure should deliver considerable operational efficiencies and cost savings, and should also remove the volatility and uncertainty that impacted our forecasting models prior to the transaction being completed.

Our consolidated Q4 2008 performance was consistent with our guidance of below Q3 2008 results for revenue and EBITDA. Consolidated revenues were $25.4 million in Q4 2008, compared to $28.2 million in Q3 2008. As Peter detailed earlier, this anticipated revenue decrease was due primarily to cuts in ad spend across our MIVA Direct business in the second half of 2008, in anticipation of sale of MIVA Media.

EBITDA was a loss of $19.3 million in Q4 2008, compared to an EBITDA loss of $7.9 million in Q3, 2008. Q4, 2008 EBITDA included an $18.7 million non-cash tangible and intangible asset impairment charges, as it related to our MIVA Media and Direct businesses. $5 million for non-cash compensation expense, $0.5 million in restructuring charges, and it was offset by $9 million -- sorry, $0.9 million reversal of accruals for our Comet System and Tiscali litigation settlements. Q3 2008 EBITDA included a $1.2 million non-cash compensation expense. $2.7 million in restructuring charges, and $2.4 million for litigation judgments. Adjusted EBITDA loss was $0.5 million in Q4 2008, compared to adjusted EBITDA loss of $1.6 million in Q3 2008.

The Q4 2008 adjusted EBITDA loss excludes $18.7 million for the non-cash tangible and intangible asset impairment charges, $0 .5 million in restructuring charges, $0.5 million of non-cash compensation expense ,and the negative reversal of the accrual for Comet Systems and Tiscali litigation. Q3 2008 adjusted EBITDA excluded $2.7 million in restructuring expense. $2.4 million for a one-time litigation judgment. And $1.2 million in non-cash compensation expense.

Cash and cash equivalents decreased $11.2 million at the end of Q3 2008, to $6.7 million at December 31, 2008. The Q4 2008 figure includes a $4 million draw-down from our credit line with Bridge Bank. The decrease in cash and cash equivalents from Q3 2008 to Q4 2008 includes $1.9 million for the Comet litigation, $0.6 million for the Tiscali litigation, and approximately $2 million in EU restructuring costs.

Consolidated gross margins were 49.1% in Q4 2008, that is marginally below the 50.7% we reported in Q3 2008. MIVA Direct's gross margin before advertising spend was 94% in Q4 2008, and that's comparable to Q3 2008. MIVA Direct's gross margin excludes advertising spend of $5.2 million in Q4 2008, and $6.5 million in Q3 2008, which is included in consolidated operating expenses within the marketing, sales and service line. Media EU gross margins remain constant at 20% from Q3 2008 to Q4 2008.

Media US gross margins decreased from 30% in Q3 2008 to 28% in Q4 2008, which was largely attributable to slightly higher revenue share, otherwise known as AAC and lower revenue per click. MIVA Direct contributed 33.9% of total revenue in Q4 2008 compared to 36.8% in Q3 2008, versus 36.7% in Q4 2007.

The decrease in MIVA Direct share revenue of overall Company revenue can be attributed to cuts in our advertising spend in the lead-up to the sale of MIVA Media. The cuts in ad spend resulted in the decrease of tool bar users from 5.6 million at the end of Q3 2008 to 4.6 million at the end of Q4 2008. Despite these decreases, I'm encouraged to report that our ALOT tool bar continued to significantly out-monetize our Legacy Starwar brand.

In 2008 the monetization rate for 1,005 live users, also known as RPMLU for ALOT tool bars is nearly double that of our Legacy brand. In our US and EU media operations, we recorded 482 million total paid clicks in Q4 2008, and that's up from 427 million in Q3 2008, and 413 million in Q4 2007. Q4 2008 revenue for our total MIVA Media third party ad network was $16.8 million compared to $17.8 million in Q3 2008.

The decline in total media revenue in large part was due to the expected decrease in media EU revenues following our restructuring program. Q4 2008 Media EU revenue was $4.4 million, down $1.7 million sequentially from Q3 2008.

In our Media US business, revenue was up approximately $0.6 million sequentially from Q3 2008. This higher revenue was attributable primarily to seasonality.

Total operating expenses were $32.3 million in Q4 2008, compared to $23.3 million in Q3 2008. Q4 2008 operating expenses included an $18.7 million non-cash tangible and intangible asset impairment charge, related to our MIVA Media and direct businesses. There was a $0.5 million in restructuring charges and $0.5 million in our non-cash compensation expense. Q3 2008 operating expenses included $2.4 million for litigation judgments, $2.7 million in restructuring charges, and non-cash compensation expense of $1.2 million.

For the full year 2008, revenue was $116.4 million compared to $149.1 million in 2007. Media EU revenues declined from $46.2 million in 2007 to $26.7 million in 2008, as we expected with our restructuring program. Media US declined from $54.7 million in 2007 to $48.3 million in 2008. MIVA Direct revenues decreased from $51.9 million in 2007 to $41.3 million in 2008. The decrease in MIVA Direct's full year 2008 revenue is primarily attributed to the impact of the cuts in advertising spend, as we detailed earlier on today's call. Gross margins were 49.1% in the full year 2008, compared to 52.4% in 2007.

Operating expenses were $99.1 million in the full year 2008, compared to $115.9 million in the full-year 2007. In 2008, total operating expenses included $18.7 million non-cash tangible and intangible asset impairment charges, related to our MIVA Media and Direct businesses, $4.2 million in restructuring charges, and $1.7 million in litigation settlements.

In 2007 operating expenses included $20.1 million in non-cash goodwill intangible and intangible asset impairment charges, related to our MIVA Media division. And $1.3 million related to a portion of a litigation settlement. Excluding the $18.7 million non-cash tangible and intangible asset impairment charges, related to our MIVA Media and Direct business, the $4.2 million in restructuring charges and the $1.6 million in litigation settlements in 2008, and the $20.1 million non-cash impairment charge and $1.3 million related to a portion of litigation settlement in 2007, operating expenses were $74.5 million in the full-year 2008, and $91.7 million in 2007. The $17.2 million decrease is due primarily to the effects of the restructuring initiatives conducted during the year to align the revenue and the cost structures of our business.

EBIDTA was a loss of $36.1 million in the full year 2008, compared to a loss of $27.9 million in 2007. Adjusted EBITDA was a loss of $8.4 million in the full year 2008, compared to positive adjusted EBITDA of $0.1 million in 2007. The full year of 2008 adjustments were $18.7 million non-cash tangible and intangible asset impairment charges, related to our MIVA Media and Direct businesses, $4.2 million in restructuring charges, $1.7 million in litigation settlements and $3.1 million non-cash compensation expense. The full year 2007 adjustments were the $20.1 million non-cash impairment charge, $3.8 million non-cash compensation expense, $2.8 million in restructuring expenses, and $1.3 million related to a portion of a litigation settlement.

Our GAAP net loss from operations was $45 million or negative $1.38 per basic share in full year 2008. This compares to GAAP net loss of $37.1 million or negative $1.16 per basic share for full year 2007.

As of December 31, 2008, the Company had an active base of 129 full-time employees, and that's down from 139 on September 30, 2008, and 230 at December 31, 2007. The decrease in head count from December 2007 is due primarily to the Company's European restructuring plan. As Peter presented earlier, we expect to deliver EBITDA profitability in 2009 as a result of our ALOT expansion plan.

We expect revenue and EBITDA to be stronger in the second half of 2009, compared to the first half of 2009, as we see the benefits of our growth strategy and reverse the impacts of the cuts in advertising spend that were made in 2008 prior to the sale of Miva Media. I'm pretty excited, and now I want to turn the call back over to Peter for some concluding remarks.

Thanks, Mike. So in summary, our MIVA priorities remain focused on delivering against the expansion plan that I set out earlier in today's call. I believe that we now have the fundamentals and cash in place to achieve our growth targets and deliver EBIDTA profit in 2009. Let me turn it back over to Alex so we can go to Q&A, if there is any.

Thank you, operator, we will turn it over to questions, now.

(Operator Instructions). We'll go first to Eric Martinuzzi with Craig-Hallum.

Thanks for taking my question, and congratulations to Mike on your new position. The revs for MIVA Direct for 84 were $8.5 million. Given it is March 31, would you hazard a guess as to what those revs will be in Q1?

Talking MIVA Direct. You're asking, Eric, for MIVA Direct revenues in Q1?

Right, are we -- if it was $8.5 million in Q4 and we had a little bit of decline in the number of tool bar users out there, are we up, down, sideways--

Yes, we'll be down slightly in Q1 '09, but ramping pretty dramatically towards the end of Q1 '09 in terms of our number of tool bars.

Okay. Your balance sheet ,again, we got a 12/31 snapshot here. I'm more interested in the March 31 snapshot. For given that you -- it was an $11.6 million cash sale, at least the gross number was $11.6 million, what is your pro forma cash balance right now?

Well, as of March 12th, as we indicated in our release, we were at $12.4 million, and but if you take a look at the available working capital, we're at $8.3 million at this point -- or at that point.

Okay. And so that reflects the outstanding Bridge Bank?

That was actually paid down.

Okay. So $8.3 million. Now , does that -- given what you're going to be spending here, if you're at a roughly pro forma number of $12.4 million at March 12 you're going to be spending to drive adoption of the tool bars and home pages and desktop product. Where does -- where do we trough at, if you can't give me a number, just maybe a quarter, so we can get some sense of making progress to

We should be troughing toward the end of Q2, and we figure it will be around $6 million or $7 million.

Okay. And then some housekeeping.

That is troughing with that agressive ad spend that I mentioned in my part of the script.

Right, that had you ramping from $4.4 -- $4.4 -- $5.2 million was the spend.

Actually we got as low as -- hang on, let me look it up. We're taking ad spend in Q4 to, I think it's $9.4 million, Eric

Okay. I have $9.2 million.

$9 .2 million, I'm sorry, that's right. And we got ad spend as low as what?

That was the $4.4 million.

That's right. We got ad spend as low as $4.4 million when we were trying to save cash to pay the bills and get our sale of Media done.

So that also would be a trough spend, that Q1 '09 at $4.4 million.

Right. But Mike's point is that we don't anticipate any cash issues at all. Cash troughs, like you said, in the $7 million range with including that we've already started on the twelfth with a very aggressive ad spend again.

Okay.

I'll tell you, too, on that -- toolbars, even though they got as low as whatever we just produced, which was 3.8, tool bars after today which is only 16 or 17 days' worth of ad spend are at $4.4 million.

Interesting, it ramped right up pretty quick then.

We picked up 600,000 in -- between 3-12 and yesterday.

Okay. Housekeeping--

By the way , I don't want to over exaggerate that. We had had ad spend completely off for about 30 days or 40 days in advance of that, so we picked up pretty quickly, and I think that will slow down a little bit but it makes us feel very bullish about this $8 million by the end of the

Yes. Because I do understand that there is a lag between the downloads and productivity of the install tool bar base. I assume zero tax rate for 2009, is that going to be close--

Yes, that is going to be real close.

And then for -- given that you've had the intangible write-down, and the asset impairment, what's a good number to use for, and you've had kind of an asset sale here. What's an ongoing depreciation and amortization number for 2009 or maybe for Q2, kind of a normalized number?

I don't have one, but it is not going to be very big. I can tell you that.

Okay. And then stock based comp, same thing? What does that get--

You can see it dropped dramatically period over period so I would expect the same number you saw there, I believe $0.5 million.

$0.5 million? Because I know it is based on the head count.

That should drop down again, too, as we head into Q2 as more people have moved off the payroll.

That was my question. Let's talk about the 50 -person non-cash charges, the DNA and the stock based comp, what do those look like? If you don't have them, that's fine. I'll circle back.

That is going to drop by a quarter or so, but not too dramatically, since most of the stock based comp is heavied up in some people that are still here. But we can get a number published on that.

Okay. That covers the questions for me. Thanks.

Good, thanks.

(Operator instructions). We have a follow-up from Eric Martinuzzi.

I'm going to monopolize the microphone. You talked working with two the world's largest search engines, I'm aware you have a pretty substantial relationship with Google. Who else is it that you're working with as you're monetizing this install base of users?

We have -- as you know, we have 21 months or so left on our contract with our friends at Google. We've also recently signed another contract that fills in behind Google with Yahoo!, and we have had that implemented now for several weeks.

Okay. And that is -- is there a specific niche that that is used for, or is that across like a backfill across the search results, if Yahoo! has better coverage you substitute in?

It's a couple of places. One, Yahoo! is now offering us and our products and then consequently backed -- back for monetization image search and news search. We also manage through Yahoo! error search, and their returns. And then also where Google doesn't give us coverage on our pages in total, we fill in the remainder of that with Yahoo! coverage, if they have it.

There is no restrictions then, I guess, with the Google contract not disallowing that type of backfill?

No, there are not any restrictions. I shouldn't say there aren't any restrictions. Google's offered priority placement in our contract, but once we give Google priority placement, then we could utilize our new relationship with the Yahoo! to fill in the difference.

Okay. Alright. Thank you .

By the way, we'll put out a full announcement on Yahoo! here in the next several days. We're just waiting for their responses back on the press release.

Thanks.

At this time there appear to be no further questions.

Great. Thanks, everybody.

Thank you . This call contains certain forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Words or expressions such as plan, will, intend, anticipate, believe, or expect or variations of such words and similar expressions, are intended to identify such forward-looking statements.

These statements are based on management's current expectations and are subject to uncertainty in changes and circumstances. Actual results may differ materially from the expectations contained in the forward-looking statements. Key risks are described in MIVA's reports filed with the US Securities and Exchange Commission, including the Form 10-K for fiscal year ended December 31, 2008. In addition past performance cannot be relied upon as a guide for future performance.

That concludes our call today. Thank you for