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July 29, 2005
More on InfoSpace
Analysts Sending Me Emails, Read This:
Here are my answers to the four questions I am consistently getting from various financial analysts:
Yes, there really is seasonality in the ringtone business. It is lowest in the 2nd and 3rd quarter. In fact, ask any mobile content provider or network operator and they will tell you that the holiday shopping season, when the majority of net adds occur, represent a seasonal uptick in revenue across the board. (You get a new phone and you buy a new ringtone, game or whatever.) Those of you who translated "seasonality" from the prior earnings call dubiously should verify that this is the case, because it is true for all companies in this space.
Yes, I do think the existing management team is strong enough to "pull it off." (As if my opinion matters.) Have you read Kathy Rae's bio? She ran an airline, for crying out loud. Is there a more difficult job on earth? This is a world-class management team comprised of people who know how to increase shareholder value. Are you really so unimpressed with what they have pulled off thus far?
My vision for InfoSpace? It is not my company, so it really doesn't matter what my vision is. My previous post was from the perspective of an objective observer. I hope I made it clear that I am literally just perplexed about the street responding the way they did to what wasn't such bad news. I'll reiterate: Look at the fundamentals again and compare them to other comps. It just doesn't make sense. Now look at the assets they have and see if you arrive at the same conclusion about the brightness of their future. This stock should be trading well above where it is. I have no vested interest, either. My defensive position of INSP is based on their numbers and their future opportunity in this space. The stock was well priced last week. Today it is an absolute bargain.
Oh, btw, I am an ass: Jim did recently provide guidance on mobile search. In March he called it their Holy Grail. That's a strong statement and fairly lame of me to miss.
Yes, I do really think InfoSpace could beat AOL, Yahoo and Google at mobile local search. These are all incredibly impressive companies, but InfoSpace is still months ahead of them in this area, maybe a year. Do not underestimate the importance of mobile domain expertise.
Finally, I will say again that this is the very kind of skepticism that I think is totally unwarranted for such an important company in this space. I respectfully suggest you stop blamestorming and take a long view not only on this company but on the mobile content space in general. I'll make you a deal - if the 4th quarter really does reflect an uptick in revenue (within the context of the current guidance) and they do launch a mobile local search product by March 2006 as Jim previously said they would, you have to tell your clients to replace the 30% you just sucked out of the stock for no reason. Sound fair?
Posted by Shawn Conahan at July 29, 2005 10:26 AM
Comments
Hello Shawn,
I am a huge fan of the mobile space and it appears that you liked the team at InfoSpace enough to sell to them. You made a very valid point on the perception that this seems to be a 'turn around management team' and it could do with some visionary leadership.
My question is in a worse case scenario, if InfoSpace was up for sale what company do you think would be a great fit for InfoSpace?
Posted by: Jake at July 29, 2005 03:00 PM
Jake - I think InfoSpace works as a pure play platform company in the mobile space. What they do very well is push content, namely ringtones, but there is no reason why it couldn't be audio and video, too. It would make perfect sense for a media company to buy InfoSpace. I had convinced Vivendi Universal of this fact several years ago, but the French management team at the time was lacking in vision, in my opinion, and so they sold Moviso to InfoSpace. Now Universal Music Group has decided to try it again. Duh. I would like to see them go to a major media company before someone like a Japanese mobile player looking for a foothold in the U.S. market.
Posted by: Shawn Conahan at July 30, 2005 04:08 PM
Thanxs for your response Shawn, just curious, what type of media, smaller, nimbler company like Yahoo or more traditional like Time-Warner when talking possible acquirer fits?
Posted by: Jake at August 8, 2005 09:10 AM
Shawn would love to get your thoughts on Jamdat and why they tanked so hard after earnings on Thursday?
Posted by: Jake at August 12, 2005 12:35 PM