InfoSpace loses partner for label licensing

Goes to show you how fragile the mobile content ecosystem can be and what a dramatic impact any changes can have on the companies involved when carriers decide to take matters into their own hands. InfoSpace said it has been notified by an unnamed carrier partner that the carrier plans to develop direct licensing relationships with major record labels beginning in early 2007 rather than rely on InfoSpace. As a result, the company expects its revenues, as well as its operating results, to be negatively impacted by these direct relationships. Through the six months ended June 30, 2006, InfoSpace generated $89.6 million in mobile revenue, of which label tone sales represented approximately $55 million. InfoSpace's total revenue for the same period was $186.1 million. InfoSpace said it plans to rationalize its costs to align them with expected future revenues. Specific plans will be announced within 30 days. InfoSpace's stock was down more than 20 percent this morning. Investors have been jittery about InfoSpace, but were pleasantly surprised by the company's second-quarter profit. Any guesses as to which operator partner InfoSpace is losing? Word on the street says it's Cingular.

To read more about InfoSpace's business update:
- check out this release