Another view.
UPDATE 1-InfoSpace says cost-cutting to help bottom line
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(Recasts, updates with details, comment, background)
By Scott Hillis
SEATTLE, Feb 12 (Reuters) - InfoSpace Inc. (NASDAQ:INSP), which
syndicates Web site and wireless content and services, said on
Monday it will lose only one-third as much money this year than
earlier thought as cost-cutting moves push it back toward
profitability.
But InfoSpace shares, which have tumbled from a year high
of $138-1/2 set last March, fell 15 percent to $4-1/4 in
after-hours trading as the new guidance did little to reassure
investors that business as a whole was improving.
"Pretty underwhelming. Basically, they are adjusting the
guidance for cost savings. There was really no encouragement on
the top line, so it's not as much as people were expecting,"
said Matt Adams, an analyst with Epoch Partners.
"This conference call did really little to raise hopes, and
the stock continues to be a show-me stock and they will have to
outperform over the next few quarters to get people interested
again," Adams said.
InfoSpace, which syndicates things like Yellow Page
listings, news and electronic commerce tools to Web sites and
mobile phone companies, would break even in the third quarter
and post a pro forma loss of 5 cents a share for all of 2001,
Chief Financial Officer Tammy Halstead told a conference call.
That is significantly better than the glum financial
outlook Halstead provided last month in which she forecast
InfoSpace, which turned a pro forma profit of 14 cents a share
last year, would record a loss of 14 cents a share in 2001 on
flat revenues amid the slowing U.S. economy.
The new guidance also forecasts a pro forma loss of 5 cents
in the first quarter and 2 cents in the second, while the
company would break even in the third quarter and post a
1-cent-per-share profit in the fourth quarter, Halstead said.
For 2002, InfoSpace would be profitable in every quarter,
with pro forma profits for the year coming in at 9 to 10 cents
a share on revenues of $300 million to $310 million, Halstead
said.
Moves by InfoSpace over the last two weeks to cut costs and
workers and focus more on the fast-growing wireless and
high-speed Internet businesses would help it pull out of the
red, executives said.
"We have clearly brought a renewed focus back to our core
infrastructure business," InfoSpace founder and Chief Executive
Naveen Jain told the call. "We have once again aligned our
costs and resources along our strong growth areas."
InfoSpace wireless revenues and subscribers would more than
double this year, with 5 million people signing up for services
based on its products, Jain said.
And its fledgling broadband, or high-speed Internet,
business would start logging "meaningful revenues" next year,
Halstead added.
Although InfoSpace would record a one-time charge of $2
million for laying off 20 percent of its workforce this
quarter, the cuts would help it save $20 million this year, the
bulk of more than $30 million it expects to save through such
belt-tightening measures, executives said.
"We have been in a very rapid growth mode. It was time to
take a step back, look at the organization and streamline the
operations," Chief Operating Officer Ed Belsheim said.
scott.hillis1@reuters.com))
Copyright 2001, Reuters News Service |
