An Analyst doesn't find the Infospace News somewhat troubling....... Woohooo..
Copyright 2001 Cahners Business Information, a division of Reed Elsevier Inc.
All Rights Reserved
Wireless Week
February 12, 2001
SECTION: News; Pg. 1
LENGTH: 619 words
HEADLINE: InfoSpace's Changing View
BYLINE: By Peggy Albright
BODY:
Day after day, Seattle-based InfoSpace Inc. announces another change as it reorganizes and refocuses its strategy. The Seattle-based Web content aggregator said last week that it is laying off about 20 percent of its employee base and realigning its resources to put itself in a better position to set its sights on opportunities in wireless, merchant and broadband markets.
That news came just two weeks after InfoSpace founder and Chairman Naveen Jain replaced wireless guru Arun Sarin as CEO in a management shuffle that also removed Rand Rosenberg, the company's CFO, and Russell Horo-witz, COO, from their jobs. Sarin, the former chief executive of Vodafone AirTouch U.S. and Asia Pacific who joined InfoSpace just last April, now has the title of vice chairman, although his role with the company is substantially marginalized. Horowitz moves to executive consultant. At least two of the management changes-Sarin's and Rosenberg's-are attributed to family considerations.
Although details of the new business strategy are yet to come, news of the layoffs gave a little boost to the company's stock-which is hovering around $5 after reaching the mid-$100s last year. But regardless of the promise of a new strategic focus at the company, at least one analyst who previously had optimistic views of InfoSpace has lost his allegiance. "I don't imagine there's a real positive spin you can put on it," says Peter Friedland, wireless analyst at WR Hambrecht and Co. The direction of the company is "in question," he believes.
InfoSpace attributes the layoffs, estimated at 250, as the final step in the integration of Go2Net, an Internet infrastructure company that it acquired last year to serve the broadband market. The announcement follows the Jan. 29 news that the company was revising its 2001 revenue estimate downward from an expected $360 million to $215 million.
In conjunction with the layoffs and the revised earnings estimates, InfoSpace said it is on the verge of announcing a new strategic measure that will de-emphasize consumer services. While that business segment as recently as the fourth quarter was providing InfoSpace with half its revenue, the company described it as low-growth and non-scalable.
The product lines receiving renewed attention as "high growth" areas include merchant services segment, which includes its yellow pages, storefront and payment processing and other platforms. That segment already brings in about a third of the company's revenue and is the area in which the company expects to build its mobile commerce revenue. Content aggregation services that wireless operators use to offer Web content to customers now brings in about 12 percent to 13 percent of the company's revenue. The company does not expect to see any meaningful revenue in broadband until at least 2002.
The company has yet to offer any details of its new plan, except to say that wireless is the No. 1 goal, according to company spokesman Steve Stratz, and InfoSpace will continue building the technology platform rather than trying to drive traffic to individual sites.
While Friedland is skeptical about InfoSpace's current business outlook, some are more optimistic. "They're still the big gorilla in the wireless space," says Gary Ozanich, a senior analyst in the voice and wireless commerce unit of The Kelsey Group.
Ozanich says he doesn't find any of the InfoSpace announcements "particularly troubling." To his way of thinking, and as last year's market showed, consumer interest in wireless data still has to evolve. "The focus now in the near term is enterprise and merchant solutions," he says.
And that's what InfoSpace is gearing up to promote.
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