Once upon a time, I was sitting on a nice 6-month, 50% paper gain on my position in Infospace. I did not sell, because I was pretty convinced that News Corp. would acquire Infospace. My rationale was that Infospace was strong in mobile and had interests in search and directories. If a sale did not materialize, I figured, the stock had increased enough to give me a margin of security.
Then, things changed. Infospace lost a major carrier which sent its stock pummelling. Suffice to say the gains evaporated. Hey, that happens with the stock market.
Today the stock closed at $620M, after the market close, it announced earnings and slipped a further 5%, and is now “boasting” a market cap of $608 million, but, its cash, cash equivalents, and marketable investments at September 30, 2006 totaled $411.0 million, an increase of $4.0 million from June 30, 2006. At the end of the third quarter, the Company had no debt obligations.
That means that INSP’s enterprise value is $197 million.
For everything its got in mobile and search, that is not very expensive. I am certainly not ancouraging anyone to buy it, but at an enterprise value of $197 million, it looks pretty cheap for a company with 3rd quarter revenues of $96.3 million (up 16%).
My reason for staying in the stock is that it bought Switchboard a few years ago and could make a comeback in local search. But, again, I’m not sure anyone should buy the stock… but the company, at those levels, could be interesting for some larger entities.
Disclosure: I own shares in Infospace, the company founder Naveen Jain said would one day be worth $1 trillion…
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