INFS Infoserve

Shares in online marketing company Infoserve Group PLC (INFS.LN) plunged nearly 17% Friday, after the firm said it will cease to be an authorized reseller for U.S. search engine company Google Inc.'s (GOOG) AdWords service early next year.

AdWords allows companies to post adverts in Google's search results and resellers are authorized to set up accounts for businesses.

Infoserve said it will stop being an authorized reseller from Jan. 7 but will continue helping its customers with AdWords campaigns.

A company spokeswoman said neither Infoserve Chief Executive Steve Barnes nor Finance Director Jonathan Simpson were available for comment.

She was unable to say why the contract had ended.

At 1129 GMT, Infoserve shares had fallen 1.5 pence, or 16.6%, to 7.5 pence, underperforming a 0.24% weaker Dow Jones Smaller Companies Index.

In its full-year results statement in July, Infoserve said its contracts with Google and Yahoo! Inc. (YHOO) had given the business "a unique position to exploit the ever-growing local search market through close ties with both companies."

It isn't clear how much revenue came from its contract with Google, but in its final results statement Infoserve said its work with Google and Yahoo! would "continue to be important contributors" to its market offering.

Last month, Infoserve said its business remained under-capitalized, and its attempts to raise funds to grow the business and cover working capital commitments had been unsuccessful.

However, earlier Friday the firm said it has agreed an GBP800,000 loan from its biggest shareholder, David Hood, who also sits on the board.

Hood has also agreed to accept 40 million new shares as payment for another GBP2 million in loans the company owes him, which will take his shareholding to 82%.

In its first half trading update earlier this year, Infoserve said on an underlying basis it is now performing at or around break-even on earnings before interest, taxes, depreciation and amortization, or Ebitda.

The company said top-line sales increased to GBP3.06 million from GBP2.59 million, while gross profit rose to GBP1.1 million from GBP792,000.

Ebitda showed a "small profit," Infoserve said, compared with a loss of GBP377,000 a year earlier.

Company Web site: www.infoservegroup.com

-By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; hannah.benjamin@dowjones.com

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