The only "exclusive news" from shareholder meeting
I give this report with great reluctance, as it will totally blow my cover to Naveen Jain, and at least one of his bodyguards (and/or chauffeurs). But I guess it is worth it, as it'll be extremely unlikely that I'll ever attend another shareholders meeting for this particular company.
I attended yesterday morning's "Annual Meeting of Stockholders of InfoSpace, Inc.," using my top secret disguise, once again most graciously on loan from levy. It again worked absolutely great this year...getting me in the door (or course signing "levy" on the attendance sign-in sheet), past the guards, a free bagel and cup of Starbucks, a free INSP cap, and securely planted near the prime front row seats.
Sadly, however, immediately following the meeting's start, Jain announced something to the effect, "As a preliminary matter, no video or audio recordings are allowed during this meeting. InfoSpace reserves all rights to any audio and video recordings of this meeting."
So I kept my state-of-the-art high-tech digital movie camera surreptitiously concealed under the turban, and throughout the meeting I was forced to keep the tape recorder completely hidden behind one of my phony breasts, and underneath the nicely color-coordinated (and very stylish I might add) burka. They never even noticed my sh*t-kicking hiking boots, which once almost accidentally popped out, when (silly me) I inadvertently (out of habit) started to cross my legs...but immediately returned to a amazingly subtle (for me) non-threatening demure posture for the rest of the meeting.
The INSP team put on a very polished and nicely coordinated dog-and-pony show. Of course there was absolutely no "news" whatsoever, which is completely normal for these types of little get-togethers. The presentation would definitely put the evangelical-like "get rich with us" Amway love-fest revivals to shame. And SURPRISE SURPRISE, Jain was elected to serve yet another 3-year term, as the Board had recommended, I'm sure as an award for his outstanding stewardship of this company on behalf of the shareholders.
Perhaps the best quote of the meeting didn't come from Jain this time, but from Ed Belsheim. There is an old German proverb: "God gave us delicious NUTS to eat, but he doesn't crack them for us." This applies to InfoSpace. Jain did make this one little promise regarding a shareholder's question expressing de-listing concerns, "That is NOT going to happen. Don't worry about it."
Anyway here's my absolutely "exclusive" story from the meeting:
Oh, but first, I must briefly go back into some distant long-forgotten history. For me personally, it's extremely relevant as to what I finally "exclusively" uncovered at yesterday's shareholders meeting. In fact, I'd like a show of hands from anyone out there who may inadvertently stumbled on this nearly-dormant thread, and who once owned any GNET stock, as to the following question: Can you remember the day, and exactly what you were doing, when Paul Allen offered to buy 52% controlling interest in GNET? I remember it very well. It was on March 15, 1999. My actual brief little true-life story of that morning goes like this:
While having my second cup of morning coffee, I called out to my wife in her office adjacent to mine and said, "Sweetheart, you know that GNET stock we bought a few months ago? (We had invested in a ton of GNET stock several months before). What do you say we dump it all today, for a very nice little 300% profit?" She replied, "Sounds good to me dear." So I logged onto my on-line trading account. I typed in "Sell" GNET at "Market Price," and entered in our TOTAL number of GNET shares that we owned. At the exact moment I was about to hit the "process order" button, I was listening with one ear to CNBC on the TV in the background (CNBC was always "on" in those DotCom "gold-rush" days). Yep, no-fooling, at the EXACT instant I was about to hit the "sell" button, CNBC interrupted their regularly scheduled programming with a big news alert. Announcing something to the affect, "Go2Net has just halted all trading. No one seems to know why." I called out to my wife and exclaimed, "Oh sh*t, something has happened with Go2Net. I don't know what the hell it is. I should have dumped it all yesterday." Even my wife, who never gets too worked-up about these things, joined me in front of the TV, as we both stayed glued to the screen. What was it? What did it mean? Are they declaring bankruptcy, or what? It seemed to take forever, but finally CNBC (I believe it was Maria Bartiromo), came back with a startling news flash. "Paul Allen has apparently offered to buy controlling interest of Go2Net, at $90 per share." My wife and I both turned to each other, and had a simultaneous OH COOL!!! moment. Well...after that, I needed a mental break, so I went outside and had a long slow drag on a cigarette (okay, no lectures please..it's the ONLY bad habit I still had, up to that point). I came back in and calmly said to my wife, "You know what dear, not only do I think we should NOT sell our GNET shares today, I think instead we should put every penny we can beg, borrow, or steal into buying as much of this stock as we can...RIGHT NOW, before EVERYONE in the world hears this news." She said, "Whatever you think dear." So, in less than 5 minutes from the CNBC news "alert"...we did.
The previous trading day (on 3/12/99) before Allen made his startling offer, GNET had traded for a little as $77/share ($38.5 split-adjusted). The day after his offer was announced, GNET hit $135.375/share ($67 1/16 split-adjusted), up as much as $58.38/share (75.81%) in just two days. The stock continued to go on up (and down) in the months to follow, eventually hitting a all-time high the equivalent of $223/share ($111.5 split-adjusted).
And just WHAT was the reason that Paul Allen stated (through his Vulcan Ventures) that he wanted to own controlling interest in GNET. There was a flurry of press reports and news articles that came out in the days, weeks, and months that followed his offer to buy GNET. Among the many statements made was the following direct quote from Paul Allen on the day of his offer, made in a March 17, 1999 press release, "Comprehensive portal services such as Go2Net delivered directly to set top boxes will be a critical component in the future of cable." said Allen. "I look forward to working with Go2Net to develop these services for the customers of our cable systems, and forging relationships between Go2Net and my cable holdings to further enhance the companies' existing offerings."
In the months to follow, Paul Allen (through Vulcan Ventures), GNET, and CHTR formed what they called the "Broadband Partners," which later became "Digeo, Inc." Here's just one statement made by Mr. Allen's Vulcan Ventures president, "This venture marks another step forward in our execution of Paul Allen's Wired World Strategy," said William Savoy. Through the Digeo partnership (19.7% owned by GNET). Among the innumerable published reports and articles were statements such as: 1) "Go2Net is poised to deliver content and services via cable to Charter's more than 6 million households...;" 2). Go2Net will provide the portal to the rest of the web, as well as other Vulcan investments...;" 3) "Go2Net has quickly become a cornerstone component to Allen's Broadband Partners initiative;" 4) "Go2Net is positioned to become a market leader in the distribution of broadband portal services by delivering its distribution of broadband services and technologies to Broadband Partners;" and 5) "Charter Communications (CHTR) has agreed to use Broadband Partners' portal services exclusively for an initial six-year period..."
I don't know about others who once posted on this thread...but for me and my family, Paul Allen's major investment in GNET (with the reasons for that investment so clearly an unequivocally stated and restated by everyone involved) was THE PRIMARY REASON we not only held onto it, bought more, and continued to hold it for way too long. I strongly suspect many GNET shareholders also held onto the stock, many even long after the disastrous "merger" with INSP, still absolutely believing it eventually would play a major roll, as was so often stated by the key executives and analysts involved...as, "A cornerstone of Paul Allen's Wired World" vision...initially through his Charter Communications cable company.
Obviously that dream is now apparently completely dead. In fact, it appears the nail was finally and very firmly verbally nailed in that coffin yesterday by Naveen Jain, at least as to what I suspect some shareholders may still believe to be the case. He publicly and directly responded to a question about what happened to GNET's supposedly being the "primary portal" to Charter Communications, and what role (if any) did InfoSpace have with CHTR's iTV broadband initiatives. Jain's answer to that question came during the question-and-answer period, that followed the "official" part of the shareholders meeting, Both Jain (and also York Baur, their new Executive VP, Wireline & Broadband) forcefully made the following statements: 1) (York) "Charter is NOT a customer of InfoSpace at this time;" 2) (Jain) "Charter has entered into a partnership with Microsoft;" and 3) (Jain) "Charter is really just a DUMB PIPE, with others to provide the content."
OKAY...I'm so sorry for getting a little distracted with some historical details there for a minute.
Here's my "exclusive news" report from the meeting:
Edmund O. Belsheim, Junior (INSP's COO, who replaced Russell Horowitz), finally terminated the meeting, stating, "This will be the last question." Immediately all of the INSP executives who were seated up on the raised stage were hurriedly ushered out a side door right next to the stage, by these two really big burly-looking guys. BTW, most of the BOD were seated out in the audience during the entire meeting, and Bill Savoy was NOT at the meeting, and never asked about or mentioned by anyone that I heard.
Anyway, as I got up to leave, I noticed out of corner of my eye, that Jain had been sort of cornered by himself up on the stage, by this guy who had persistently asked 4 or 5 probing questions during the meeting. I thought to myself, "It's much too early in the morning to go out and get sh*t-faced drunk," so I decided to mosey on over and see what the hell Jain and this guy were arguing about. The guy was still pummeling Jain with questions about why Jain should NOT have been dumping his INSP shares, at it's all-time lows during the past few months, and that he should be considering both a company "buy-back" of INSP shares, and/or encourage the company "insiders" to start showing support for the company by actually BUYING the stock, instead of SELLLING, as they had been doing this year. It was quite a debate. Jain was definitely holding his own. I slipped right behind the guy, as others began to cluster around the two of them. No one seemed to take the slightest notice of my turban and burka disguise. However, no one else could manage to get another question or word in edgewise, between the give and take parrying of the ongoing two-person debate. I did manage to catch Jain's eye, so I began politely smiling and nodding my head up and down in apparent complete agreement, every time he tried to make a point during the debate. But then one of those two really big burly guys came up to our little cluster, and firmly said to Jain something like, "We REALLY need to go now."
So I figured, what the hell. Here I am standing just two feet from (to quote that famous old article) "The Greatest Entrepreneur in All Human History"...and so I just jumped in, interrupting the still ongoing debate with the only guy who had been able to have a single question for Jain following the meeting...and just as Jain was about to turn and leave with that big guy, I reached out and actually shook Jain's hand. And the following (to the very best of my recollection) mano-a-mano, face to face Q&A dialogue between Jain and I occurred...with me initially blurting out:
QUESTION - RS:
"Hi, I'm Roger (Sherman), a shareholder (didn't say I only had 3 shares left <g>). Can I ask one quick question? Many of us shareholders wonder what has happened to the Paul Allen's Digeo broadband plans, and what roll InfoSpace might be playing? Has it now all just gone by the wayside?
ANSWER - Jain:
"Paul Allen has invested in many things, some of which have worked out, and some haven't."
QUESTION -RS:
"But wasn't Go2Net, through Digeo (which now has 300 employees), supposedly going to be providing the portal services for Charter? And thus didn't InfoSpace become a partner of Digeo, following the merger with Go2Net?"
ANSWER - Jain (absolutely EXACT word-for-word quote):
"We were NEVER a part of Digeo!"
QUESTION -RS:
"But wasn't Go2Net a 20% partner in Digeo? One of the three partners, along with Vulcan, and Charter, in developing the broadband portal for Allen's Wired World plans?
ANSWER - Jain (absolutely EXACT word-for-word quote):
"Whatever Go2Net said about that WASN'T TRUE."
So there you have it, directly from the horse's mouth. As Jain departed, I immediately turned around, walked out to the closest table in the lobby, put down my notebook (while another guy watched) and I wrote down every word EXACTLY as I had just heard it. I did appreciate Jain's blunt directness in his responses. However, if his answers to my direct queries were in fact the complete truth, I just wish someone, ANYONE, had stated that to be the case sometime, ANYTIME, during the almost TWO FULL YEARS since INSP and GNET announced that they planned to merge, way back in July 2000. If that was in fact the TRUTH, then investors and shareholders should have been told this information LONG BEFORE YESTERDAY, in order to have made "informed investment decisions"...most especially the previous GNET shareholders, many of whom had completely bought into Paul Allen's dream, and the incredibly important key role that GNET was purportedly to play as a key integral part of that dream.
And yes, Jain's last two statements to me seem to have been in direct conflict with everything stated and written about GNET's roll with Digeo broadband, that had been said in the past by Paul Allen, Bill Savoy, Charter Communications (including their past SEC filings, and IR representative), previous Go2Net Executives and in their annual reports...as well as numerous previous articles (both in print, and on the Internet) and press releases. In addition INSP's own IR representative, Nicole Knowles, did in fact finally confirm just to me over a year ago, during a second phone call (after first saying during an initial telephone query from me, that she couldn't comment on that whether or not INSP was involved with Digeo), and she also apparently also earlier had confirmed that there was in fact a Digeo/INSP relationship with another SI poster (after my extensively researched big 4-part series posts appeared on this thread, that I had done way back in March 2001, titled, "Is INSP a Partner in Digeo," starting with this post: #reply-15447806) ...she had stated to both of us that, indeed, InfoSpace was in fact, (as GNET had been, prior to the merger with INSP) still a in the Digeo broadband "patnership."
But just yesterday morning Jain personally tells me,
"We were NEVER a part of Digeo!"
"Whatever Go2Net said about that WASN'T TRUE."
So there you have it. For many shareholders...
Go2Net Dreams became the InfoSpace Nightmare.
And that's all I have to say about that.
Roger
PS. I see that INSP dropped to $1.00/share yet again...in yesterday's "after hours" trading. And, despite the fact that according to INSP's Q1-02 earnings press release, they claim to still have $275+ million in "total cash (and marketable investments)." That amount alone would come to about $1.12/share in shareholder value. In other words, not only does Wall Street currently think INSP is actually worth 12 cents per share LESS than their actual claimed cash (and marketable securities), but Wall Street is also apparently currently allowing for ABSOLUTELY NO VALUE WHATSOEVER on the rest of the entire company...which would include placing NO VALUE at all for its technology, its leadership, its patents, its partnerships, its 600-700 force employee talent pool, or its future prospects as a viable profit-making company. Just amazing!
PPS. Did anyone see Eliot Spitzer's interview last evening at 7:10 p.m. (ET), with CNBC's Maria Bartiromo. Spitzer was again commenting on his Merrill Lynch e-mail investigation scandal, and lawsuit filing against Merrill - which now intimately involves the "new" INSP class action lawsuit "Defendants." Spitzer said to Maria, "I have absolutely no question that I have more than enough evidence. I would take it to a trial any day...CRIMINAL or civil trial." Bartiromo later said to him, "We may see all 50 states come out with their own lawsuits." |
