Bert Hill
The Ottawa Citizen
A Nortel Networks bet on a promising wireless services company is in
trouble.
Less than a year after selling Saraide Inc. to InfoSpace Inc., for $356 million
U.S. in stock, the investment by Nortel and others has plunged in value to
$40 million.
InfoSpace of Bellevue, Washington, said yesterday it will eliminate 250 jobs
or 20 per cent of its workforce in a bid for profitability by this summer. After
more than a year of aggressive acquisitions, chastened InfoSpace executives
vowed to keep spending under control and focused on the technology
services that originally attracted Nortel.
At the time of the sale of 80 per cent of Saraide to Info-Space, Nortel chief
executive John Roth predicted the deal "will help make the Web in your
pocket a compelling solution for commerce, communications and
collaboration."
Instead, the fall in InfoSpace stock price has burned a hole in the pocket of
Nortel, Microcell Telecommunications, Omnipoint Communications,
Ericsson and GSM Capital L.P. and other Saraide investors.
From $40 a share in December 1999 when the deal was announced, the
stock peaked at $130.53 in March 2000 at the height of the technology
stock frenzy shortly after the deal closed.
The stock fell below $4 late last month after InfoSpace surprised the market
with an operating loss. It strengthened to $5 yesterday prior to the
announcement, then lost 50 cents in after-hours trading.
Sariade developed services that allow wireless customers to get weather
reports, stock quotes and other information via cellphones and other mobile
devices.
InfoSpace promised to de-emphasize consumer business after a badly timed
bet last fall on the consumer Web portal business. It spent $1.5 billion in
stock late last year to buy Go2Net, a consumer portal, just as the business
prospects of portals soured.
The job losses will have no impact in Canada because InfoSpace closed the
Kanata operation last year when research operations were moved to
Bellevue.
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