Media Corp surges as Google lifts search penalty

LONDON Mon Oct 19, 2009 8:48am EDT

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LONDON (Reuters) - UK Internet advertising firm Media Corp said Google Inc had lifted a penalty that hurt its rankings in Internet search results, adding the move could boost its 2010 pretax profit by 1 million pounds ($1.6 million).

Shares in the company were up 25 percent to 3 pence by 1205 GMT (8:05 a.m. EDT) on Monday, having earlier been up as much as 37 percent, meaning the stock has trebled over the last week.

The penalty, which Media Corp said it did not know the reasons for, relegated the company's key www.gambling.com site from number one on the Google search to around number 100 and also impacted its www.creditcardexpert.co.uk site.

In an interview with Reuters, Chief Executive Justin Drummond said the change to Google ratings, which coincided with the relaunch of Gambling.com, would provide an immediate boost to the company's revenue.

"It's very lucrative for us, potentially (adding) a million pounds on to bottom line profit. Every day you've got thousands of people clicking through from Google for free and we can sell those leads onto the gambling sites," he said.

Drummond said he expected underlying pretax profit for the year to September 2010 to be around 1.5 million pounds ($2.5 million), rising to over 3 million the following year.

The company made a pretax loss of 1.8 million last year.

Prior to Monday's announcement, Growth Equities & Company Research analyst Philip Moorish had forecast the company would make a pretax profit of 500,000 pounds in the current year and 2 million the year after.

The gross margin on www.gambling.com had more than halved to 410,000 pounds from over 1 million pounds in 2007 following the penalty, the company said.

Shares in Media Corp more than doubled last week after it acquired online gaming firm Purple Lounge and said On-e Media Ltd would help it relaunch www.gambling.com.

Drummond said further acquisitions were possible if the company's share price continues to rise. He is heading out on a road show for investors next week and hopes to get institutions back on board.

"I'm hoping we can get the market cap back up and start doing deals. I'd like to get the shares back up to 10p. That's my target. Then we can start doing deals again."

The company was worth 60 million pounds prior to a ban on online gambling in the United States in 2007. At the current price, it is worth 7.7 million pounds.

(Editing by David Holmes)

($1=.6135 Pound)

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