One of the best articles I've seen...(wonder if NJ himself wrote it??).....the actual article shows some pics and graphs...
KLP
PS....as yet, I don't know anything about "streetedge.com" date was 7-1-2000, and 7-16-2000.....
streethedge.com
Naveen Jain founder and chairman of Infospace
History was made in April of 1996. Naveen Jain chairman and CEO (former Microsoft Employee) founded Infospace with the vision of delivering information over the Internet. Since 1996 then Internet has morphed from just another form of communication, to the premier way of publishing information, and commerce. During this time Infospace has also evolved from just simple Yellow Page information, to transacting purchases over the Internet. During this analysis we will discuss Infospace’s Strengths, Weaknesses, Opportunities, and Threats.
Infospace is located in Redmond, Washington (just a couple of miles away from the Microsoft campus). It has a very small corporate headquarters by Fortune 500 standards, but never the less impressive for a company that is a little over four years old.
Here is a map of Infospace’s location in Redmond Washington.
By having their headquarters location in Redmond Washington, Infospace can be part of the ‘Big Technology Boys’ who have their headquarters on the west coast of the United States (with the likes of Microsoft, Oracle, Intel, and Yahoo).
At first Infospace was just known as a ‘local content aggregator’. They would find information, and than sell it to the larger sites that inked deals with them. Some of their content partners included Homes.com, Weather.com, Match.com, Women.com, LeisurePlanet.com, and CareerPath.com. Infospace would take the content from their above partners and push it to their inked customers. They include AOL, Netscape, Microsoft, Snap!, Go2Net, ABC, and CBS, and three thousand other affiliates.
The above partners give Infospace over a 91% reach across the Web. That kind of number is unheard-of. There is no other online service that can reach that kind of percentage over so many sites!
Their services include Merchant services, and Wireless services. Merchant services give merchants the chance to sell promote, and distribute their products and services across Infospace’s distribution network. Some of their distribution affiliates include BellSouth, SBC Communications, US West, NTT, and Vodafone. Merchants can also market their products over cell phones using Infospace’s Wireless solutions. Now a customer can purchase or receive information of merchants products over the cell phone (this is a very hot way of doing business in Japan). Infospace is ranked number one among directory services on the Internet. They receive over six hundred forty two million impressions per month with twenty nine million unique users. Again these numbers are breathtaking (the only Internet corporations that can come close to those numbers is Yahoo, or AOL).
Over the next ten years Infospace has a chance to become a very special company. Naveen Jain understood this and took the company public in December 1998, in the Nasdaq Marketplace under the symbol INSP. He needed to raise cash from the public markets, in order for corporate expansion. Now I understand that people are skeptical of the typical .com corporations that don’t have earnings, but Infospace has been profitable over the last four quarters (the last two quarters Infospace destroyed analysts estimations by over 80% each time). Mr. Jain also wanted the .com dropped off Infospace.com to make sure the investors realize that Infospace is not the typical Internet Corporation. So now that Mr. Jain has over thirteen billion in market capitalization, what is he going to do with it?
For the last five years the Internet could only be accessed over some form of computer (either desktop, or laptop). Over the next five years this will change. With the help of large telecom corporations like Nokia, Qualcomm, Motorola, Cisco, Sprint, and countless others the Internet can now be received over the Television, and Cellular Phones. This event will change the whole ball game for many different players. By the end of the year 2000 there will be over one hundred seventy million people connected to the Internet with over 7.7 billion web sites attracting these users (International Data Corporation). With the introduction of the Cell Phone more people will become connected to the Internet for a longer period of time. When you consider that the cell phones industry is growing at over 30% per year, and half of them will have web browsers installed, this will be a goldmine for Infospace. Infospace makes money when a user makes a query for the Infospace database, and now they will have more people using the Internet for a longer period of time.
With opportunities like this one might ask can Naveen Jain handle this responsibility just by himself? Well that answer was no. Over the last three weeks Infospace’s management team has increased its industry presence substantially. On April 19th Naveen Jain snagged the Vodafone Airtouch CEO Arun Sarin. Mr. Sarin will take over the Infospace CEO position, while Mr. Jain will remain chairman and visionary. One analyst put it this way; the leaders of Infospace can now do 48 hours of work in a 24-hour day. ‘Analysts said the hire confirms InfoSpace's determination to be a leader in the wireless Internet revolution. Sarin brings a lot of "credibility and deep wireless experience and it really is a validation for InfoSpace as well as the wireless Internet opportunity," said Chase H&Q Ripstein.’ (Source was CBS MarketWatch.com) When Arun Sarin was with Vodafone his responsibilities were the US/Asia region, and packaging their global Internet solutions.
The second stunning hire was on April 24th when Mr. Jain brought on Russ Arun as Infospace’s new CTO. Russ Arun worked at Microsoft and Sun Microsystems for the last eighteen years. His responsibilities at Microsoft included developing technology for handheld devices. He also integrated Microsoft Internet Explorer 3.0 and 4.0 with Windows 95 (I bet the US Justice Department loves this guy). After being hired Mr. Arun was quoted ``I compare InfoSpace to what Microsoft and Sun were in their early days. InfoSpace is clearly a leader in launching the new industry created by the convergence of the two fastest growing industry segments, Internet and Wireless. I could not see myself passing on such a great opportunity and contributing towards the creation of this new industry.'' (Infospace press over the Internet)
Did Infospace have to break their bank getting all this new talent? The answer is no. Both Mr. Sarin, and Mr. Arun believe strongly in Infospace so they are getting paid in stock options. This is why no one was shocked when they joined Infospace after its stock was humbled during the latest Internet sell off of in March and April.
Infospace’s (INSP) Stock performance since its IPO in December of 1998.
Notice how they joined during mid to late April when Infospace was at its low. Now when Infospace returns to its old high the new employees will become VERY HAPPY employees!
In the Internet industry the rate of change is very aggressive. When a company is the first one in that industry, they usually build up such a head start that their competition can’t win. One good example of this is Yahoo. Yahoo built up such a lead that Lycos, Infoseek, and Excite could never catch them. Why Infospace is a leader in its part of the Internet industry, what happens if Yahoo, AOL, or Microsoft decide to enter this segment of the industry? Well the good news is to this date the three above have no interest for entering the content industry, but they could always change their mind. If they do Infospace will give them the fight of their life!
Why Infospace is happy to have all the new talent, what happens if this new talent leaves, or starts to bump heads within the organization? This situation could happen at any time (especially in the technology industry). It is important to remember that Naveen Jain is a well-respected manager and many analysts believe that he can keep this impressive management team together.
Lastly, what is going on with Infospace’s stock price over the last two months? Well as any trader can tell you this is not an Infospace problem, but an overall market problem. Right now the stock market has entered its slow season. This happens when the weather gets hotter, and liquidity dries up. Here is an important static to remember, (If you invested $10,000 in the S&P 500 from 1945 to 1999, but just during the months of October to May, than it would be worth over 1.2 million today. The same $10,000 over the same time period, but during the other months of the year, the end result would be $11,300. Now that is a very big reason to buy during one part of the year, and sell during the middle part of the year). This is why many analysts (including myself) believe that everything is still quite fine at Infospace and the fundamentals have not fallen apart. Internet companies usually bottom in August, retrace the bottom in October, and than run until the end of the first quarter.
Notice how Yahoo (Yhoo) topped in April of 1999, and hit their bottom in August of 1999. This is the norm for quality publicly traded Internet Corporations.
Overall Infospace is a well-positioned company in its industry. Infospace has leveraged itself within the two fastest growing industries in the world, cell phones, and the Internet. Their management team is well known, and among the best in their industry’s. Lets put it this way, Arun Sarin did not leave his well paid top job at Vodafone, in order to be second in command at Infospace for nothing. He believes that Infospace will dominate its industry in the future, and I couldn’t agree more.
Solutions
Infospace has strategically located itself in the two fastest growing industries in the world (Internet, and Cellular). Never the less there are potential problems that could disrupt this corporation’s incredible growth rate.
Today the labor market is very tight, and no industry feels this squeeze like the technology industry does. I agree with Mr. Jain’s concept of paying employees with stock options. It’s also important to remember that if the Infospace stock falls for an extended period of time, employees might try to work elsewhere if their stock options have not been re-priced (Microsoft did this 3 weeks ago after their stock was down 45% to prevent their employees from leaving).
When push comes to shove the largest issue that Infospace will face is competition. What happens if AOL, Yahoo and Microsoft enter this area of the Internet? Well to be fair Microsoft won’t be able to enter Internet content, with the Department of Anti-Justice case that is against them. AOL and Yahoo already have plans to introduce the Internet on other appliances than just the personal computer. Now ask yourself is this really bad for Infospace? Their cellular revenues will drop a bit (the industry is still projected to grow between thirty to fifty percent per year for the next ten years) the amount of people using the Internet will soar greatly! Infospace would make even more money being an arms dealer for the other Internet companies that will slug it out. Right now there are about 170 million people in the world that use the Internet. While that sounds like a lot one should remember there are over 6 Billion people on Earth (now that is what I call a growth rate). In essence the industries that Infospace focused on is growing so fast there is room for many players for years to come.
Lastly when one studies Infospace they really don’t have to look much farther than its founder Naveen Jain. Many people look at Mr. Jain as a Bill Gates type of personality. He is hard driven, knowledgeable and self-confidant. Mr. Jain’s management style is very aggressive, and he is known as a mover and shaker among his peers in the industry. Analysts on the street love his charismatic management style combined with his innovative thoughts. Infospace would suffer greatly if Mr. Jain left the firm. The good news is Naveen Jain is only in his mid 40’s along with his two new hires, and in this fast changing industry there is no chance of getting bored (Bill Gates said the Internet kept him from retiring from Microsoft years ago).
As an investor I look to find companies that most people have not heard of, and invest in them early. Infospace looks like a future winner in its industry, and I am backing up the truck to get this stock right now!
InfoSpace bests analyst's targets
By Cecily Fraser, CBS MarketWatch
Last Update: 6:05 PM ET Apr 26, 2000
NewsWatch
REDMOND, Wash. (CBS.MW) -- InfoSpace turned in a stronger-than-expected fourth-quarter performance Wednesday, riding a wave of success owing to its association with two of the hottest sectors in technology -- wireless communication and the Internet.
The company provides commerce, information and communication infrastructure services to wireless devices, merchants and Web sites.
"InfoSpace is leading the convergence of the two fastest-growing industry segments in history -- wireless and the Internet -- creating a new industry -- the wireless Internet," said Naveen Jain, the company's chairman, in a statement.
The stock fell 61/64 to 64 3/64 ahead of the earnings news, which was released after the market closed.
InfoSpace generated a pro forma net profit of $1.9 million, or a penny a share, blasting past the First Call consensus estimate by 7 cents. A year ago, the company reported a pro forma net loss of $5.3 million, or 3 cents a share.
The Redmond, Wash.-based company (INSP: news, msgs) said revenue hit $19 million, increasing 261 percent from $5.3 million a year earlier and besting some sales projections amid strong demand for its wireless, merchant and consumer services.
Chase Hambrecht & Quist had estimated quarterly sales would grow to $15.7 million.
"We're doing well in all sectors of our business," Jain told CBS.MarketWatch.com. "Adoption for our wireless products is better than expected."
Carriers are seeing more demand from their customers to get services on their phone, Jain added. InfoSpace has relationships with more than 24 carriers. The nation's largest wireless carrier, Verizone, and the nation's third-largest carrier, AT&T, will launch InfoSpace services sooner than expected, Jain said.
Indeed, in the earnings press release the company said AT&T will be launching services to all AT&T wireless subscribers in the second quarter. Vodafone will launch in the third quarter to U.K. mobile customers, while Verizon Wireless is to introduce services in the third quarter. |
