TRANSCRIPT OF JAIN'S 6/12/01 CNBC INTERVIEW
Naveen Jain, CEO of InfoSpace (INSP), was invited to be interviewed by Steve Frank on CNBC, so he could respond to some negative comments made about his company during a 6/8/01 CNBC interview, with the Don Listwin, CEO of OpenWave (OPWV).
The following transcription was done from a video tape recording of the interview with Jain. As Mr. Jain tended to speak very rapidly during the interview and as he has a fairly pronounced accent, several of his words during the interview were unintelligible to this transcriber. Anyone who wishes to offer any other interpretations and/or corrections to the transcription below is welcome.
CAST OF CHARACTERS (heard during the interview):
1. Bill Griffeth (BG): CNBC anchor
2. Liz Claman (LC): CNBC anchor
3. Steve Frank (ST): Wall Street Journal reporter
4. Bill Listwin (BL): CEO of OpenWave
5. Naveen Jain (NJ): CEO of InfoSpace
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INTRODUCTION TO THE INTERVIEW:
BG: "Coming up, our Internet Investor segment. OpenWaves's CEO Don Listwin took a direct shot at Infospace's business model when he appeared on CNBC last week."
LC: "Steve Frank is going to give Infospace's CEO Naveen Jain a chance to defend his company next, so stay tuned."
(commercials)
LC: "In the Internet Investor today. Does Infospace have a viable business model. Some of the company's rivals are questioning whether it does, and that has the Infospace CEO hopping mad. Look at Infospace stock today (screen shot of 1 year chart for INSP's stock price). It's up 17 cents, at $4.04 (the "after hours" price, as its actual "close" was $3.96). Like many in this sector, it has fallen sharply over the past year. The Wall Street Journal's Steve Frank joins us now with more."
INTERVIEW:
SF: "Thanks very much Liz. As you point out, it has not been an easy ride lately for Infospace, the company that, among other things, provides software for cell phones and other Internet appliances to access and utilize the Internet. A couple of earnings warnings, a disastrous slide in its stock. And now, questions about its survivability. Those questions most recently came from the CEO of Infospace's sometime rival, OpenWave, appearing on CNBC last week."
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FILM CLIP FROM PREVIOUS CNBC 6/8/01 INTERVIEW:
(showing Don Listwin, CEO of OpenWave on the screen)
DL: "Infospace I think was a good initial play an insertion play, but long term the engineers want to be able to build something and the marketing people want to differentiate itself. I don't see it as...ah...a big model going forward."
SF: "Do you see it going away"?
DL: "Well...uh...you know, I don't know if it will absolutely go away, but...um...let's say they haven't shown up when I've talked to competitors, as I've gone around the world."
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SP: "Needless to say, those comments did not sit well with Infospace's CEO, Naveen Jain, and he join's us now with his response. Naveen, good to see you. Thanks for being with us."
NJ: "Good to see you Steve."
SF: "What do you say to Mr. Listwin"?
NJ: "I think Mr. Listwin...the only part he's right about is that we don't really...don't see them in our top three competitors because OpenWave is nowhere to be seen...ah...when it comes to providing the underlying wireless infrastructure services and the applications. The fact is that the Verizon, the Cingular, the AT&T, the Voices Stream, the Quest, the Altel, the PowerTel, the Cincinnati Bell, they all have spoken with a single thing, that when it comes to data services they choose Infospace. And the reason they selected Infospace actually is exactly for the reason that Don (Listwin) is still seem to get hands around the business. Don is very new to this industry, and I think he's still trying to understand where the industry works. The telco's, remember the only thing they care about, like any other business, is making money, and making profits."
SF "But if you...I understand your point, but if you look at in the terms of revenues, their revenues at OpenWave are double yours. They're at $815 million this year expected, versus two hundred...actually more than that, versus $214 million for you, so they're almost quadruple yours, and theirs is growing at 76% this year. Yours are flat."
(CNBC stock comparison Chart on screen, showing INSP down -92.84%, and OPWV down -60.06% the past 12 months)
NJ: "But we're in very different businesses. Like saying the Amazon revenues are twice that of OpenWave, that has no really...no meaning. What OpenWave does is essentially sells the commodity software, like unified messaging, or they sell the Web gateway. What Infospace does is essentially provides the reoccurring revenue, which is the underlying infrastructure services platform, both for consumer revenue and the commercial revenue. And in fact, Infospace gets paid one or two dollars per subscriber per month, on a reoccurring basis, and that's not counting the mobile commerce revenue, and for every transaction that Infospace generates in revenue."
SF: "Again, they may be in a commodity business, but they're making money, and you're not profitable."
NJ: "Very simple reasoning that Infospace essentially delivered $43 million of Pro Forma profitability just last year. In fact, we were profitable every single quarter last year, and this year for the first two quarters, because of the acquisition that we did of Go2Net, we may not be essentially losing very marginally, 5 to 6 million dollars."
SF: "But also your business is slowing down."
NJ: "Actually, business is NOT slowing down. Our wire...just to give you an idea, in our wireless just from the Q4 to Q1 we grew 33% sequentially...that we have two million subscribers, compared 1.5 on Q4."
SF: "So why are your overall revenues not growing, and you dipped into negative territory"?
NJ: "Actually, our overall revenue are not slowing down from our core infrastructure businesses. The reason it looks like a slowdown, is because of the acquisition of the Go2Net. We have in fact have completely de-emphasized the direct to consumer business, and that's where the revenues have come down."
SF: "Was that a mistake then, to buy that and then not use it"?
NJ: "Well actually we...ah...what we are using from Go2Net is their underlining infrastructure business, which is their payment gateway, which is their search technology, and some good people, good set of people that you..."
SF: "Did you over pay for it"?
NJ: "Ah...It's hard to say what you pay for it, because really the value that it comes from, what you can do with it, rather than what you paid for it."
SF: "Okay. One of the things that has made you so controversial is the comments that you've made in the past about you company's stock price. Let's listen-up on what you said on the market capitalization."
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FILM CLIP FROM PREVIOUS CNBC 2/15/00 INTERVIEW:
(showing Naveen Jain, CEO of Infospace on the screen)
NJ: "In fact, my prediction is that Infospace, if we were to continue executing right, will be over one trillion dollar company."
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SF: "One trillion dollars, but you're now close to one billion dollars. Far off from where..when you made those remarks."
NJ: "Well essentially, first thing is the NASDAQ has come down, and when you look at the company or enterprise that we're building for the next generation, you don't look at the next year or next month. What you're doing is you're building an enterprise that will last for generations to come, and you just look at the market potential with a billion cell phones, and we're getting paid one to two dollars per phone. You can do the math."
SF: "Was it a mistake to make those remarks, and those predictions"?
NJ: "Absolutely Not! We still believe that the company has a great potential, and if you look at our potential today is higher than..."
SF: "A trillion dollars"?
NJ: "I really think the company's potential is higher than the companies like Microsoft Intel combined, and today I still think those predictions can come still true in the next 25 years."
SF: "One of the reasons that's so controversial, of course, is that on the way up, and even on the way down you have sold, personally, a tremendous amount of stock. More that $200 million dollars worth...uh...and there are those who are actually suing you. Shareholders who are suing you, saying you knew this stock was way overvalued, and those comments help feed that euphoria...and you were dumping the stock the whole way."
NJ: "Hey Steve. First of all, no...no shareholder is suing us for that, and the number two, I still own 63 million shares. In the last six months alone I acquired another 2.5 million shares from options and direct in the market place, so we obviously...eh...if you look at the things, it comes to that I own 63 million shares, acquired 2.5 million shares, continue to believe in the company, and that's the reason you see me working hard, is not because I need to make more money, it's because we believe that there's tremendous opportunities for Infospace, where Infospace can be a great enterprise, and you can need to just to stay tuned for the next 25 years and watch us execute."
SF: "Just to clarify. You're not facing any shareholder lawsuits at this point"?
NJ: "Absolutely correct"!
SF: "No shareholder lawsuits"?
NJ: "No shareholder lawsuits."
SF: "Okay. So you don't regret making those predictions, and selling the stock, at the same time"?
NJ: "Actually, to be honest with you, the predictions I made...in that I still believe, in that Infospace is in a great position, and I think our business model is probably better business model than any other company in (unintelligible) that I've ever seen to date."
SF: "And the quarter that you're in currently. How's it going"?
NJ: "Our quarter is doing well and then we continue to be very comfortable with...with where we are."
SF: "Are you going to make any money"?
NJ: "Ah...you know it's...it's something for analysts to decide. We continue to execute and build a great company."
SF: "Okay. Naveen Jain of Infospace. Thanks very much for joining us today, and thanks for responding."
NJ: "Thank you very much Steve."
SF: "Liz, back to you."
LC: "Thanks Steve."
BG: "Thank you very much Steve."
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POSTSCRIPT:
Steve Frank appeared again today (6/13/01) on CNBC (the day after his interview with Naveen Jain), and stated that it turns out there is in fact a shareholder's lawsuit against current and former officers of Infospace. A "shareholder's derivative lawsuit," which he did confirm with a representative of Infospace. The Infospace representative said that company itself is not the primary defendant in the case. |
