INSP Annual Stockholders Meeting notes
CAVEAT
I am an amateur investor and a human. Mistakes may be made. When in doubt ask me, others, Investor Relations, or other sage counsel.
INTRODUCTION
For a multi-million dollar company the meeting was incredibly small. There were about 100 chairs and 50 people in the room. About half of the people were suits: officers, directors, finance types, legal types - the folks that were name dropping in the back of the room.
FORMAL MEETING
It wasn't a record setter, but the official meeting only took 3 minutes. Everything passed, but of course there wasn't much up for debate. The days of great drama and anguish might be behind Infospace.
BUSINESS PRESENTATION
The CEO gave a 12 minute presentation that was very basic.
The main products or services of Infospace are Search & Directory, and Mobile. He broke the data down by sector but the only data I captured unambiguously in my notes was that the total industry market of which Infospace is only a part will grow to $20B in 2008. Small chunks of big markets can mean lots of money. Big chunks are even better. Ringtones were big, but he emphasized gaming as coming on strong.
Financial data was impressive. Year to year revenue growth was 89%, and earnings grew from $-9M to $51M. 1Q05 was their seventh consecutive quarter of positive earnings.
QUESTIONS & ANSWERS (paraphrased to make my life easier)
This almost didn't happen. There was such a long gap between the CEO asking for questions and someone finally putting up their hand, that he almost closed the meeting right there.
? The market reacted as if Infospace had guided lower, but he emphasized that the company confirmed yearly guidance and that the market got ahead of itself and was the main source of the confusion. 2005 has had a great start and looks like a strong year.
? He can't guess about stock prices, despite the obvious interest. He can focus on growing the business and the profits.
? They like their balance sheet and its $384M in cash. It would be best used for unspecified investments.
? Infospace currently downloads to at least 500 types of phones and other devices, but such things as PDAs usually aren't properly equipped for it.
SUMMARY
That was it. Eighteen minutes for a complete review of the company's picture.
CONCLUSION
The meeting emphasized that there are three stories: the company, the stock, and the meeting I sat through. They all have Infospace in common, but they don't tell the same story.
The company looks strong in general terms: lots of cash, no significant debt, increasing revenues, growing market. Something is working right.
The stock continues to be saddled with history. It is too frequently lifted up as an example of how bad the bubble was or how successful some survivors have become. Neither point of view balances the good and the bad. The stock acts that way and swings high and low way out of proportion for the news events.
The meeting, which ideally is where stockholders can learn more about their company, is a very low value event to me. I learned more from the Annual Report and the SEC filings. I don't expect data that isn't in those documents. I go to such meetings to better understand emphasis and management style. The meeting didn't provide any of that, unless the message I was supposed to receive was that the current management will go out of their way to not show enthusiasm for their job or the company's business.
In other words, the only things I have to offer from attending the meetings are my impressions. There can be many interpretations and guesses, but I know for sure that I came away from the meeting unenthused for the company and its prospects. The business is doing well, but there was nothing to convince me that Infospace has a compelling competitive advantage in a competitive marketplace. It does have advantages, but none of them seemed unique or guarded by high entry barriers.
So I guess, that I don't see a reason to buy INSP over some other stock. In that case, I'll continue to sell as I need cash.
REQUEST FOR DISCUSSION
There was so little discussion in the meeting that maybe some of this can be kicked around here.
Do others think that the company is thinking long term and merely being very low key, or are they positioning themselves as a buyout candidate?
They have a lot of cash. Would they instead be the buyer instead of the buyee? The Moviso purchase has served them well, according to their presentation. Was that luck, or indicative of a very savvy M&A strategy?
Is the company making compelling presentations elsewhere? Why sell to the choir that already owns the stock? Granted that annual stockholders meetings are superfluous unless great drama is involved. Rarely do I see any vote go against Management’s Suggestion. Maybe they see the meeting as a cost and want to get it over as quickly as possible.
Talk it up. I'm not enthused about the company, but don't think they are an obvious winner or loser. I do think that Infospace and INSP are fascinating examples from which to learn about public corporations. That's the greatest value I've received from my investment.
DISCLAIMER
LTBH of INSP and GNET since before the bubble, but I'd have to check my records to see if I've already sold those shares. INSP and GNET were the only pure (at the time) Internet plays in a very diversified portfolio. |
