LiveDeal, Inc. (NASDAQ: LIVE), the company that combines best of breed customer acquisition services for small businesses with a combined classified and Internet Yellow Pages directory platform, announced today a net loss of approximately $1.53 million for the fiscal year ended September 30, 2008, down from a net gain of approximately $1.8 million in fiscal 2007. Our diluted loss per share in fiscal 2008 was $0.25 compared to a gain of $0.33 per share in the previous year. The company's non-GAAP adjusted net loss for the fiscal year, which excludes certain expenses related to management changes and write-offs related to the Company's 2007 merger, as well as related tax adjustments, was $1.0 million or ($0.16) per share on a diluted basis. See table herein for a reconciliation between non-GAAP adjusted net income and net income per GAAP that the Company believes more accurately reflects our continuing operations.

Fiscal 2008 Highlights

• Net revenues in fiscal 2008 were $25.3 million, compared to $26.3 million in fiscal 2007.
• Fourth quarter net revenue was $5.8 million, which was sequentially flat versus third fiscal quarter of 2008.
• LiveClicks and LiveAdvisor - Significant growth in our Premium Search Engine Marketing (SEM) LiveClicks and LiveAdvisor products of 47%, month over month, during the fiscal year, with average one-year contract value growing from $1,500 to almost $5,000 per customer.
• Became a leading certified Google Adwords reseller.
• Added new Independent Board Members – Sheryle Bolton, Greg LeClaire and Richard Sommer
• Re-aligned business units to drive revenue and profitability in 2009.
• Established strong balance sheet with a total of $7.67 million in cash available as of the date of this release.

Operating Highlights:

Net revenues for the fourth fiscal quarter of 2008 were $5.76 million, down from $7.1 million in the fourth quarter of fiscal 2007 but flat sequentially from the $5.8 million of revenue in third fiscal quarter of 2008. Net loss for the fourth quarter was $277,000, or $0.04 per share, compared with a net gain of $376,053 in the fourth quarter of fiscal 2007 and a net loss of $1.17M in the third quarter of fiscal 2008.

“We are making excellent progress at focusing LiveDeal's business toward considerable new opportunities we see in the local Internet advertising market,” said Mike Edelhart, CEO of LiveDeal Inc. “And even with a more challenging economic environment expected in 2009, we believe that the small and medium-size businesses that we are targeting will continue to turn to the Internet to find the customers they need. We believe our stable operating cash flow, growing product and partnership pipeline, and a strong balance sheet will enable us to grow our business even in this difficult economic environment. Our 2009 plan is to achieve profitability even as we make the changes necessary to allow us to capture our significant business opportunities in the new year and continue to create a strong industry position in the local Internet advertising market.”

Net revenues in fiscal 2008 were $25.3 million, compared to $26.3 million in fiscal 2007. LiveDeal’s change in net revenues for fiscal 2008 was primarily due to a shift in the company’s focus away from adding new customers in its basic directory business toward focusing development on producing and selling a new suite of Internet audience acquisition services, led by our LiveSites, LiveAdvisor and LiveClicks products. While these sales represented only three percent of total revenue for fiscal 2008, this new channel's gross sales grew 47% per month during the 2008 fiscal year and over 700% for the year, generating more than 1,000 new customer relationships with an average contract value more than eight times that of the basic directory business. Currently, the company has more than $2.6 million in deferred revenue in this segment that should be realized over the course of the contract term in fiscal 2009.

"We believe this new business should allow us to capture a larger part of the local Internet business opportunity as small and medium size businesses (SMBs) migrate from the traditional offline directory advertising to a more targeted ROI driven local Internet advertising," added Edelhart. "We have a strong balance sheet with $7.67 million on hand and an expanded suite of products that should continue to show promise in fiscal 2009."

Financial Highlights

Cost of services increased in fiscal 2008 as compared to fiscal 2007 due to an increase in Local Exchange Carrier (LEC) billings, which have a higher cost than other billing channels.

Gross profit for fiscal 2008 was $20.9 million, which represents a decline from LiveDeal’s $22.1 million gross profit in fiscal 2007. This decrease is attributable to lower revenues and slightly higher costs of services. Gross margin percentages were 83% in fiscal 2008 and 84% in fiscal 2007, respectively.

General and administrative expenses totaled $15.6 million in fiscal 2008, as compared with $12.5 million in fiscal 2007. The increase was primarily due to the following:

• $2.3 million of increased compensation costs, including $0.9 million of charges associated with the termination of our former CEO and $0.8 million of increased compensation attributable to the LiveDeal acquisition occurring in mid-fiscal 2007.
• $0.5 million of increased depreciation and amortization expense stemming from the LiveDeal acquisition, which added $2.2 million of amortizable long-lived and intangible assets and additional capitalized costs for enhancements to our websites and on-line customer service applications.
• $0.4 million of other expenses attributable to the LiveDeal acquisition occurring in mid-fiscal 2007.

Sales and marketing expenses increased in fiscal 2008 compared to fiscal 2007 due to an increase of approximately $1.6 million of increased online marketing costs and $1.1 million associated with the amortization of customer acquisition costs, partially offset by a $1 million reduction in direct response mailing costs.

GAAP operating income decreased to a loss of $1.9 million in fiscal 2008, from a profit of $3.3 million in fiscal 2007, primarily driven by the revenue drop and increased operating expenses detailed above.

The income tax benefit for fiscal 2008 was $0.2 million, as compared to an income tax provision of $1.9 million in fiscal 2007. This decrease resulted primarily from LiveDeal’s changes in pre-tax income and the write-off of certain deferred tax assets resulting from book-tax differences in the recognition of restricted stock awards.

LiveDeal had $4.6 million of cash on hand and $11.3 million of total working capital as of September 30, 2008. As of the date of this release the company has a total of $7.67 million in cash available. The Company still has no long-term debt, and shareholder equity stood at $36.4 million at the end of fiscal 2008.

Recent Company Highlights

• Shortly after the close of the 2008 fiscal year, LiveDeal sold its YP.COM web address for $3.8 million dollars. This is a step in the company's plan to refocus its brand around LiveDeal and LiveDeal directory services. With the sale, LiveDeal's business directory moves to the URL yellowpages.livedeal.com as part of the company's coordinated set of website offerings.
• Became a leading certified Google Adwords reseller. In addition, added Miva and Looksmart as well as other ad networks as fulfillment and traffic partnerships.
• In addition to announcing the addition of Mike Edelhart as a CEO and board member, the company added three new independent members to its board of directors – Sheryle Bolton, Greg LeClaire and Richard Sommer. These additions add considerable public company C-level operating and board experience to the company's board of directors.
• LiveDeal introduced its LiveClicks and LiveAdvisor products to enhance its directory and classified services with best-of-breed Internet customer acquisition services for small and medium size businesses. These services provide SMB customers with the ability to host and maintain a web presence combined with sophisticated search engine marketing techniques, access to our own websites, partnerships with other websites and other techniques to generate traffic to our customers’ websites.
• Redesigned and enhanced our websites, including yellowpages.livedeal.com, livedeal.com and classifieds.livedeal.com, to better improve the user experience on our site.

Conference Call Information

The company will hold its fourth quarter and fiscal 2008 conference call and business update on January 5th at 1:15 p.m. PST. Listeners can access the conference call by dialing 866-783-2146 and entering passcode 72144070. International callers can access the conference call by dialing 857-350-1605 and entering passcode 72144070. A replay will be available two hours after the call by dialing 888-286-8010, (or 617-801-6888 for international callers) and entering passcode 83788818.

To listen to the live webcast of the conference call please refer to our investor section of our web site at http://investor.livedeal.com.

About LiveDeal, Inc.

LiveDeal, Inc. is a leader in the local online classifieds and Yellow Pages marketplace with millions of goods and services listed for sale in every city and zip code across the U.S. Through its online property, www.livedeal.com, LiveDeal offers businesses and consumers a simple and affordable way of creating a web presence and marketing their products and services to local audiences. Buyers and sellers come together through LiveDeal’s vast local marketplaces to find and list business services, merchandise, real estate, automobiles and pets. LiveDeal also provides local online marketing solutions for small- and medium-sized businesses. LiveDeal seeks to deliver local search engine marketing (SEM) through its LiveAdvisor™ and LiveClicks™ products that combine best-of-breed technology with a strong partnership model and an inside sales team to create an efficient platform local businesses need to create and optimize their Internet search advertising campaigns. LiveDeal allows businesses to extend their marketing reach to relevant customers on the Internet through partnerships with Google, Yahoo!, Miva, Looksmart, Superpages.com and others. LiveDeal, Inc. is headquartered in Las Vegas, Nevada. For more information, please visit www.livedeal.com.

Use of Non-GAAP Measures

We provide a reconciliation of non-GAAP adjusted net income to net income on a GAAP basis below for the year ended September 30, 2008, and the third and fourth quarters of fiscal 2008 (amounts are rounded to the nearest thousand):

LiveDeal, Inc. provides non-GAAP financial information to assist investors in assessing its current and future operations in the way that LiveDeal, Inc.'s management evaluates those operations. Non-GAAP adjusted net income and significant charges are supplemental measures of LiveDeal, Inc.'s performance that are not required by, and are not presented in accordance with, generally accepted accounting principles (GAAP). The non-GAAP information does not substitute for any performance measure derived in accordance with GAAP. LiveDeal, Inc. believes that this non-GAAP information provides useful information to investors by excluding the effect of some significant expenses and other amounts that are required to be recorded under GAAP but that LiveDeal, Inc. believes are not indicative of LiveDeal, Inc.'s operating results.

LiveDeal, Inc.'s management evaluates and makes operating decisions about its business operations primarily based on revenue and the costs of those business operations on an ongoing basis. Therefore, management presents non-GAAP financial measures, along with GAAP measures, in this earnings release by excluding these significant items from the period expenses. The income statement line items involved in the adjustment from GAAP to non-GAAP presentation in this earnings release include severance and related costs associated with the termination of our former CEO, significant payments incurred in connection with our former CEO’s employment agreement as well as a true-up adjustment to stock based compensation expense for estimated forfeitures.

For each such non-GAAP financial measure, the adjustment provides management with information about LiveDeal, Inc.'s underlying operating performance that enables comparison of its financial results in different reporting periods regardless of significant charges due to changes in accounting principles or exogenous events.

Management uses these measures to help it make budgeting decisions between those expenses that affect operating expenses and operating margin (such as sales and marketing, and general and administrative expenses), and those expenses that affect cost of revenue and gross margin. Further, the availability of non-GAAP financial information helps management track actual performance relative to financial targets, including both internal targets and publicly announced targets. Making this non-GAAP financial information available to investors, in addition to the GAAP information, helps investors compare LiveDeal, Inc.'s performance with the performance of other companies in our industry, which use similar financial measures to supplement their GAAP financial information.

As stated above, management recognizes that the use of these non-GAAP measures has limitations, including the fact that management must exercise judgment in determining which types of charges should be excluded from the non-GAAP financial information. Because other companies, including companies similar to LiveDeal, Inc., may calculate their non-GAAP earnings differently than LiveDeal, Inc., non-GAAP measures may have limited usefulness in comparing companies. LiveDeal, Inc. has provided non-GAAP results to the investment community, not as an alternative but as an important supplement to GAAP information, to enable investors to evaluate LiveDeal, Inc.'s operating performance in the same way that management does.

Forward-Looking and Cautionary Statements

This press release may include statements that constitute “forward-looking statements,” which are often characterized by the terms “may,” “believes,” “projects,” “expects,” or “anticipates,” and do not reflect historical facts. Forward-looking statements involve risks, uncertainties and other factors that may cause actual results, performance or achievements of LiveDeal, Inc. and its subsidiaries to be materially different from those expressed or implied by such forward-looking statements.

Factors that may affect forward-looking statements and the Company’s business generally include but are not limited to (i) the risk factors and cautionary statements made in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2008; (ii) other factors or statements described in the Company’s other filings with the Securities and Exchange Commission; and (iii) other factors that LiveDeal, Inc. is currently unable to identify or quantify, but may exist in the future.

Forward-looking statements speak only as of the date the statement was made. LiveDeal, Inc. does not undertake and specifically declines any obligation to update any forward-looking statements.