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Technology Stocks : InfoSpace (INSP): Where GNET went! -- Ignore unavailable to you. Want to Upgrade?

To: Puck who wrote (22793)	12/14/2000 3:10:26 PM
From: levy	Read Replies (4) \| Respond to of 28311

INFOSPACE to 566 (provided we get some international deals)......Ok Sufa is on my good list again and he agrees with me that infospace is the WEB BEHIND THE WEB...this piece is a bit old but still worth posting InfoSpace (INSP) “By providing the infrastructure for communication, information, and commerce services, Infospace is to the Internet what the nervous system is to the body.” -Annual Report "A new Microsoft is born...get ready for the global commerce infrastructure company of the new millennium." –Sufa Rashtchy Research Analyst US Bancorp Piper Jaffray InfoSpace powers the platform of services for Web appliances, interactive TVs, screen phones, PDAs and other emerging appliances. InfoSpace sells news headlines, sports scores, stock quotes, weather information and other information in a package to wireless carriers and web portals. Doesn’t sound like a great technology? It also makes $1-3 per phone per month. InfoSpace’s technology provides an extra $10-15 a month for the wireless provider so asking $1-3 is not a lot. According to Nokia and Ericsson, there will be over 1.5 billion cell phone users by 2003. Wireless Internet users are expected to outnumber those on PCs by year-end 2003. It is also estimated that half the phones will have web access. Infospace is in the best position to benefit from people accessing information from their cell phones. In addition to making money from monthly fees it receives a percentage of what is bought using a cell phone. InfoSpace has signed thousands of merchants such as local bookstores, electronic stores and grocery stores. As of now InfoSpace makes 20% of what is bought, but Naveen Jain, the founder of the company, has stated that it will drop to 5%. With the merchants the competitive advantage comes in. InfoSpace has about 600,000 merchants signed up and with the merger of Go2Net and InfoSpace the total will come to 1.7 million merchants. It would take any competing company years to sign up this many merchants. I recently tried out the technology at a local Verizon store. I was so impressed with the freedom of checking news and stock quotes from anywhere I wanted to that I bought one. I will not be giving it up anytime soon, as I expect anyone buying it to do the same. Some of the many partners include AOL, Verizon, US West, Bell South, AT&T, Vodaphone, Lycos, ALLTEL, SBC Wireless and Microsoft. One of the major phone companies not using InfoSpace’s technology is Sprint PCS. They have an in-house information provider. Price Target: As I stated before there are expected to be over 1.5 billion cell phones worldwide by 2003. For my estimate I am using 1 billion. 50% or 500 million of the cell phones are suppose to have web access but I will using 33% or 300 million phones for the estimate. As of now InfoSpace has an 88% market share. Lets assume that market share drops 10% to 78%, although very unlikely. Gross margins have been rising steadily up from 76% in 1997 to 86% in 1999. For my estimate I am using the current gross margin although it will probably improve. So, 300 million phones, each making InfoSpace 1-3 a month, 78% market share and 86% profit margins. 300 million x 78% = 234 million web phones using InfoSpace. For the per phone fee I am using $1.50. $1.5 x 234 million phones = 351 million dollars a month $351 million x 12 months = $4.212 billion in revenue by the end of 2003 $4.212 billion x 60% after taxes (40% tax) = $2.527 billion $2.527 billion x 86% profit margin = $2.173 Billion in earnings. For the estimate I will use a p/e of 80, low considering INSP could grown 100% for the next few years. 80 p/e x $2.173 billion earnings = 173 billion dollar market cap. Factoring in the GNET merger the current market cap is about 12.829 billion dollars. By then end of 2003 I expect INSP to support a market cap of 173 billion dollars. After the merger there will be 307 million shares outstanding. 2.173 Billion earnings / 307 million shares = 7.09 dollars per share $7.09 x 80 p/e = $566 share price