* Q2 net income $27.4 million vs $17.6 million
* Firm moves focus away from desktops and search
By Ari Rabinovitch
JERUSALEM, Aug 6 Israel-based Perion Network
posted on Wednesday higher quarterly earnings, but
lowered its 2014 outlook after Google dented revenue
prospects by unexpectedly altering its browser policy.
Perion, whose technology helps developers distribute apps
and make money off them through advertising, is also shifting
focus away from desktop computers and search functions to the
mobile and video sectors, company chief executive Josef
Mandelbaum told Reuters.
"We're lowering the outlook mainly because of the change in
(Google browser) Chrome. We're not going to spend as
aggressively because we would be losing money, and we are
preserving the profitability of the business," Mandelbaum said.
Last month Google made a simple yet significant switch,
adding extra steps for users to take in order to accept internet
add-ons, when previously, agreeing was the default setting, he
This will likely cut into revenue, Mandelbaum said, because
users are less likely to take the time to agree to a new add-on
- a process that generates income for Perion.
Perion and its competitors, which include
IAC/InterActiveCorp and Blucora Inc, had not
expected the change, he said.
"If past history is an indicator, it will require two to
three quarters of adjusting," he said.
Perion shares in Tel Aviv were down 1.53 percent to 27.10
shekels in afternoon trading.
Perion is also looking to lift its activities in the mobile
sector. In June it agreed to buy Grow Mobile Inc of San
Francisco for up to $42 million in cash and equity to expand its
offering for mobile application advertising.
"We are actively looking at further acquisitions ... and
there are things in the pipeline," Mandelbaum said.
Second-quarter revenue jumped to $111 million from $81.7
million a year earlier while net income rose to $27.4 million
from $17.6 million.
For 2014, Perion trimmed its revenue outlook to $380-$400
million from a previous range of $460-$470 million.
The forecast for earnings before interest, taxes,
depreciation and amortization (EBITDA) was cut to $110-$120
million from $125-$130 million and its estimate for net income
fell to $80-$90 million from $103-$108 million.
Perion announced last week it had extended by three years
its partnership with Microsoft search engine Bing,
which in the past has brought hundreds of millions of dollars in
revenue, Mandelbaum said.
He added that the new deal should be similar in size.
Perion is also known for its consumer apps IncrediMail and
(Editing by Steven Scheer and Crispian Balmer)