Excite Consolidating: Excite, which claims to have...

Excite Consolidating: Excite, which claims to have nailed down the No. 2 spot behind Yahoo in the volatile Internet search engine business, is gearing up for a retooling.

A week ago, the Mountain View, Calif.-based start-up offered a choice of buyout or relocation to 12 contributing editors, 10 of them in Los Angeles. Excite, which has 190 employees in Silicon Valley, is preparing to move into larger quarters in nearby Redwood City to accommodate its rapidly growing work force.

Excite co-founder and Vice President Joe Kraus said the consolidation is to prepare the company for a strategic change in its Internet directory, which features reviews of popular sites on the World Wide Web.

“No way are we shrinking,” Kraus said, though he declined to be specific about the make-over.

Last week, Excite announced revenue of $6.5 million for the quarter ended Dec. 31. That was 61% higher than in the previous quarter--but the company still lost $12.7 million for the period, including $4.3 million that was due to the acquisition of a competitor, WebCrawler.

Excite touted its deal to be the exclusive search engine on America Online, and Kraus said it is now the clear runner-up among companies that help people find things on the Internet via indexes and search technology.

But the acquisitions and other investments that have helped get Excite where it is certainly haven’t come easy: The company lost $43.1 million for the year on revenue of $14.8 million.

Earlier this month, first-place Yahoo surprised Wall Street by posting a profit of $96,000 on revenue of $8.5 million for its most recent quarter.