Some harsh advice is coming from financial analysts after InfoSpace announced one of its major operator partners, believed to be Cingular Wireless, has decided to develop direct licensing relationships with major record labels instead of using InfoSpace by next year. InfoSpace's shares fell 22 percent yesterday, and analysts were slashing estimates and calling for the company to sell off businesses to give investors a return. Wedbush Morgan analyst Scott Sutherland trimmed InfoSpace's projected 2007 earnings to 24 cents a share from 39 cents, a 39 percent decrease for what was previously the high end of Wall Street estimates.
"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., an independent research firm in New York. "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." Ouch.
To read more about InfoSpace's woes:
- check out this article from SmartMoney.com