My notes from a telephone conversation with Ms. Knowles of INSP IR. Took place 8/9/01.
Started by stating my shock of the downward guidance 7/24 after Jain gave interview on 5/01/01 where he cautiously restated they were shooting for breakeven to profit for Q3.
Knowles explained 'most of the downward guidance' came from the loss of advertising in the wireline side of the business. She was quick to point out this is the case industry wide.
Because of this, she said INSP made a decision (presumably between 5/1/01 and 7/24/01) to no longer go after the nonrecurring revenue and focus on the 2 to 3 year deals that produce a healthy revenue every quarter.
I mentioned that I have been having trouble getting a response from INSP IR. Knowles informed me IR just got their email 'In Box' back on line the day before (8/8/01) and that it had been off line since the Thursday before (8/2/01?).
I attempted asking a couple times about the exact amount of money INSP had on hand. I asked, what I thought was very clear, to know about the actual liquidity. Knowles said the number was 446 (million) cash and investments.
I worked at breaking that down, and she reached for some 'paperwork'. As much as it was going to be broken down for me, I came away with the fact that out of the 446 million, 'about 75 million was long term' and the rest was not anything over 12 months (short term investments?) and that everything else was basically liquid.
Don't know if this was intentional but Knowles then launched into the fact that Tammy (the CFO) was simply amazing and that the reason I (investors?) keep seeing cash being kept by INSP, Knowles then quotes to me that INSP only used 1.5 million in operations, is because Tammy reviews investments a couple of times per quarter as well as running a pretty 'tight ship.' Knowles said INSP is not burning through money.
I came back to trying to get real liquid numbers of cash on hand and asked if I was correct in assuming INSP had 446 million minus the 75 million long term to equal the amount of cash and 'liquid assets' on hand. I was told I was correct.
She said acquisitions were done in an active way last year but if something made sense presently, they would act on it. Basically there is no policy to NOT make any purchases.
I then asked about the downward guidance numbers. Knowles agreed and said I was exactly right when I felt the 33 million figure would exclude the barter income as well as the "absolute bottom line numbers" of revenue INSP expected to generate as of 7/24/01. She said Q2 barter income was either 16% or 18% of reported revenue. For Q3 she expects barter to come in at around 4% of revenue and that the barter reported would be 'carry over.
Knowles reiterated the fact that the numbers they gave going forward were "very conservative" numbers and that upward guidance would be announced if the market turned upward. INSP would not announce any revised downward guidance for any future quarter ahead of the present quarter. If revised guidance of future quarters are to be made, they would be announced at earnings.
She mentioned INSP did come out in December of last year when the markets were pressured to say they were comfortable with the stated guidance.
Knowles said INSP was active and working very hard but that they would not neccesarily be putting out much news in the typically quiet, slow August timeframe. Said most of their analysts are on vacation. Said their trading volume at present was very very low also. Finished by saying they would definitely contiue to put out news.
We talked about message boards in general, she felt 10% of the content is useful with 90% being awful. I said I would be working to improve the 10% ratio and worked in my desire to contact IR regularly as questions arose.
I brought up the misinformation out there for us 'retail investors' and cited the Wired News article that stated INSP handled the Verizon 2 Way SMS Text Messaging. Said I wrote the author and was told the article was mistaken.
Knowles referenced the fact that the 2 Way SMS Text messaging is 'No big (deal)', and that it is handled in-house, and that most of the carriers handle 2 Way SMS in-house.
Knowles said if INSP doesn't put out a press release on a specific service they are providing, then they are not doing it.
She assured me the 2 Way is not a sophisticated technology and Verizon handles it in-house. Knowles added that they do provide the 2 way for European carriers and have been for years. Said the 2 Way was very similiar to calling someone on the phone.
What INSP is really working on with the carriers is the interoperability. "Once, hopefully, one of the carriers adopts it, the others will, hopefully, fall in line.
The "in" INSP has is the relationship with 80% of the carriers, as well as the technology. Right now, Verizon cannot message Voicestream or AT&T.
I asked about the big 5 year contract with Verizon. What exactly is INSP got with that relationship? What was stressed is the ability for INSP to monetize the merchant services through the SuperPages channel. Knowles said that in additon to the above, she felt Verizon would have the ability for up selling and it was her opinion that Verizion would 'hit the minimum' anything over the minimums would be very good for INSP.
I had thought I heard in the earnings report that some of the European carries revenues were not reported because they 'didn't meet the minimums. Knowles did not understand what I was talking about and that all actvity is reported in. I was working on a wrong assumption that carriers had to have a minimum of subs before they were billed. I am still not too clear on 'minimums'.
**End of notes** |
