Proof is in the Pudding.
Interesting Post from Yahoo.
Owning INSP at these prices, Part #3
by: drj1997 01/24/01 10:49 am EST
Msg: 158295 of 158298
Owning INSP at these prices,Part 3
by: info_space_king (35/M/Infocity) 08/09/00 08:14 am EDT
Msg: 73059 of 158291
In exchange for allowing wireless operators to generate extra revenue by providing its
services to their customers, InfoSpace gets compensated in numerous ways. Contractstypically provide for $1-5 million over 2-3 years plus subscriber fees. In North America
carriers charge $10-15 a month and pay InfoSpace $1-3 per month. In Europe and Asia,
where customers pay per query rather than per month, InfoSpace gets roughly 10 cents
per query (a query represents usage of a service—for example, sending an instant
message would constitute one query). In addition, InfoSpace gets paid by the merchants
in its network when consumers locate them through a search and when it sends
promotions on their behalf, and receives a commission on every sale that occurs as a
result of these services (InfoSpace shares its merchant revenues with the carriers, which
creates another major incentive for them to use its platform).
To illustrate the magnitude of InfoSpace’s potential, let’s crunch some numbers. You
read the estimates above for wireless Internet users. Such estimates usually prove
conservative when dealing with revolutionary technologies like the wireless web. But for
the sake of this scenario we will assume otherwise. Let’s take Nokia’s estimate of 600
million Internet-enabled mobile subscribers by 2003 (which is significantly less
aggressive than Merrill Lynch’s target of 1.5 billion by 2005) and say it’s actually 100
million too high. That gives us 500 million in 2003. And let’s say 25% of those, or 125
million, will be powered by the InfoSpace platform, and assume its per-subscriber fee
will be $1 per month, at the low end of the range (we’ll assume the same for Europe even
though that payment structure should actually prove more lucrative than the North
American one). Here’s what we end up with:
125,000,000x$1x12(months)=$1,500,000,000
That gives us $1.5 billion in revenues for 2003, compared to revenues of $36.8 million in
1999. Pretty impressive, isn’t it? Keep in mind that the 25% market share used in the
calculation is a fraction of InfoSpace’s current position around the world. And remember,
these figures don’t include any of its other revenue streams like its merchant and web site
services, both of which are extremely promising and growing rapidly. They also don’t
factor new markets the company is pursuing and has already done deals in such as
handheld computers, Internet appliances and interactive television. So even if InfoSpace
signs no new customers, loses a major portion of its existing customers and gets nothing
out of any other aspect of its business, its revenues will still grow at an incredible pace. [ First | Last | Msg List ] Reply |
