Novice Investing - Giving InfoSpace some Space

Date: Tuesday 07th 2008f October 2008 01:49:49 AM

Giving InfoSpace some Space - 09/19/2007

By: Novice Investing Staff

Info Space Inc. (INSP), which was one of our cash comfort candidate, sold its online directory business for $ 225 Million. The directory business includes site such as switchboard.com and Info Space's white and yellow pages services. Looking closely at Info Space's stock price prior to the deal, market capitalization stood at $ 431 Million. Clearly, this is a huge sale for InfoSpace. As a result, shares shoot up 30% to close at $ 17.30 from $ 13.00 the previous day.

With half of cash added to InfoSpace's coffer, it is no wonder that investors cheer the move. However, that is not the only assets InfoSpace had if it were to sell off the company pieces by pieces. It owned other sites such as search engine dogpile etc. While its market share is negligible, InfoSpace is valued attractively that the news of the deal will move up the share price. Further, management had indicated that the proceed from the sale will be distributed via share buyback or a huge one time dividend.

InfoSpace is not expected to make a profit anytime soon. However, another asset sale will prop up the stock price considering how low it has been trading. With the recent interest rate cut from the federal reserve, it is possible that another suitor will come in and scoop InfoSpace outright.

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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Info Space Inc.. (INSP) or any other securities.

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