Following its Q3 earnings report earlier today, InfoSpace, reeling from the loss of its biggest operator partner Cingular, has had to make some radical decisions to cut costs and restructure, and some of them were outlines in the rather-painful earnings call today.
Among them: it has suspended new investment in its recently launched direct-to-consumer portal Moviso, as well as new content initiatives. It has already announced plans to reduce headcount by approximately 250, or roughly 30% of its workforce.
CEO Jim Voelker also said in the call that “Our remaining media business is expected to generate positive cash flow. We intend to fulfill all of our contractual obligations and maintain and update our current catalog of ringtones and graphics in the ordinary course of business.”
In response to a question about what the company will do with the $411 million it has in cash, Voelker said: “I would not cross mobile totally off the page yet. Remember, we still have a really good, thriving services business here in mobile, so it is possible there will be things out there that could enhance it, but if you are thinking about the mobile content side, Gordon, you are right. It is highly unlikely we would be investing there.”
As to why Moviso, which is a D2C site, would be affected due to loss of Cingular, Voekler has a roundabout way of explaining that: “For us, it was a matter of scale of the overall business that we have. Having the carrier channel produce well over $100 million a year of revenue on media gave us a scale, an operational scale, that we could invest in Moviso with incremental dollars, if you will. Once that business became sub-scale, that advantage was no longer there, and so, at least at this point in time, we have suspended the work on that. I think that kind of sums it up.”
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