InfoSpace Buyback: Who Cares?
Stocks: (INSP)(GOOG)(YHOO)(NWS)
InfoSpace (INSP) announced a $100 million share buyback today. The stock did not react.
InfoSpace revenue in Q1 was $90.3 million up from $87 million in the prior year. The company had a gain of $77 million from a lawsuit in 2005, and adjusted EBITDA that backs this out was $12.7, down from $21.9 million in 2005. The company guided that Q2 would be an uninspiring $90 to $90 million with adjusted EBITDA of $5 to $6 million.
InfoSpace's online revenue was down and mobile revenue was up. The company provides online and mobile content such as yellow and white page data.
Stanford Group Company's Clayton Moran summed up what much of Wall Street thinks of InfoSpace recently at forbes.com: "The opposite is true for InfoSpace, which Moran rates as a "sell." Its mobile unit acts as a middleman between content providers and phone companies, a relationship Moran says is unnecessary and will eventually end. The Internet ad firm bucked an industry-wide trend last year and lost market share."
Over the last four quarters, the company has seen an erosion of its operating income. In the quarter ending June 30, 2005, this figure was $13.4 million. It dropped to $1.6 million in the quarter ending March 31, 2006.
InfoSpace's stock has dropped from a 52-week high of $36.81 to a low of $21.26. Even with the buyback, the stock only trades at $22.72.
InfoSpace's business is being targeted by companies like Google, Yahoo! and online community giant MySpace, owned by News Corp., so perhaps very few people are surprised that a decision to buy in shares was not greeted with any enthusiasm. A very large amount of InfoSpace's customers make up the bulk of its revenue, as the company's Q states: "Our top five customers represented approximately 84% and 80% of our revenues in the first quarter of 2006". One of the large search companies only has to pick off one of two of these to significantly hurt Infospace's revenue.
Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at douglasamcintyre@gmail.com.
InfoSpace (INSP) announced a $100 million share buyback today. The stock did not react.
InfoSpace revenue in Q1 was $90.3 million up from $87 million in the prior year. The company had a gain of $77 million from a lawsuit in 2005, and adjusted EBITDA that backs this out was $12.7, down from $21.9 million in 2005. The company guided that Q2 would be an uninspiring $90 to $90 million with adjusted EBITDA of $5 to $6 million.
InfoSpace's online revenue was down and mobile revenue was up. The company provides online and mobile content such as yellow and white page data.
Stanford Group Company's Clayton Moran summed up what much of Wall Street thinks of InfoSpace recently at forbes.com: "The opposite is true for InfoSpace, which Moran rates as a "sell." Its mobile unit acts as a middleman between content providers and phone companies, a relationship Moran says is unnecessary and will eventually end. The Internet ad firm bucked an industry-wide trend last year and lost market share."
Over the last four quarters, the company has seen an erosion of its operating income. In the quarter ending June 30, 2005, this figure was $13.4 million. It dropped to $1.6 million in the quarter ending March 31, 2006.
InfoSpace's stock has dropped from a 52-week high of $36.81 to a low of $21.26. Even with the buyback, the stock only trades at $22.72.
InfoSpace's business is being targeted by companies like Google, Yahoo! and online community giant MySpace, owned by News Corp., so perhaps very few people are surprised that a decision to buy in shares was not greeted with any enthusiasm. A very large amount of InfoSpace's customers make up the bulk of its revenue, as the company's Q states: "Our top five customers represented approximately 84% and 80% of our revenues in the first quarter of 2006". One of the large search companies only has to pick off one of two of these to significantly hurt Infospace's revenue.
Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at douglasamcintyre@gmail.com.
posted by douglas mcintyre at 10:13 AM
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