InfoSpace: What Went Wrong: A Dissenting Shareholder’s View

Infospace, which is in the midst of trying to a major shareholder dissent, has its annual stockholder meeting coming up May 31.
Sandell Asset Management, a investment management firm that owns about 8.8 percent of Infospace shares (largest shareholder for the company), has filed its proxy statement with SEC and some interesting view on why it thinks INSP dropped the ball: “We believe that this poor performance has been caused by 1) investment in a risky, and ultimately failed, mobile growth strategy, 2), failure to maximize profitability and drive growth at Online and 3) complacency over costs and poor internal controls. The investment into the mobile content business was a poor decision as the business had high costs, low margins and few barriers to entry. Once InfoSpace had invested the capital, proved the market opportunity and helped carriers achieve scale, the decision to go direct for the carriers was inevitable and should have been foreseen by management. During the time that management was focused on mobile, the internet search industry was in a period of rapid growth and aggressive capital investment. Competitors such as Google, Yahoo, MSN, AOL and Interactive Corp successfully grew their search-related businesses rapidly through innovation and investment.

We readily acknowledge that InfoSpace

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