InfoSpace’s Shares Tank 22 Percent on Carrier Loss; Need To Windup?

It has to be Cingular, as we mentioned yesterday and today analysts are coming out about it too…that’s the partner Infospace is losing. Anyway, its shares tanked 22 percent today, on that news, and some analysts are saying it is time to sell or wind-up the company, which is probably harsh and unlikely.
In its latest 10-K filing, Cingular, Yahoo and Google each accounted for more than 10% of its total 2005 revenues…so it has to be Cingular…the other two being on the search/directory side.
MarketWatch: Robert W. Baird analysts estimated the total business being lost from the customer’s decision would equate to about 30% of InfoSpace’s total revenue.
Raymond James, which estimates the lost business at 10% of the company’s revenue, said it expects the company to begin losing money, but it believes it will come up with a cost-control plan within a month.
SmartMoney: Cingular accounted for about 70% of the label tones revenues (about $55 million of the $90 million ringtone sales in H106) for InfoSpace, according to Mark May, an analyst at Needham & Co.
“Though unlikely, windup of business, sale of assets/remaining operations, and return of cash to investors are the most beneficial outcomes for investors at this point, in our view,” wrote Sasa Zorovic of Oppenheimer & Co. “We believe that, given the rapidly evolving markets in which the company operates, the significantly impaired outlook for the markets it directly serves, the likely turmoil inside its employee ranks, its likely inability to recruit, motivate, and retain exceptional people needing to pull off a turnaround, we believe investors would be best served by a winding down/sale of remaining operations and return of cash to investors.” More brutal stuff in the SmartMoney story.

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