InfoSpace Inc. (INSP) filed Quarterly Report for the period ended 2009-09-30.
InfoSpace Inc. is a leading global Internet information infrastructure services company. InfoSpace provides commerce information and communication infrastructure services to wireless devices merchants and Web sites. The company's affiliates include a network of wireless and other non-PC devices including PCs cellular phones pagers screen telephones television set-top boxes online kiosks and personal digital assistants. These include relationships with AirTouch Vodafone GTE Intel Ericsson Nokia NeoPoint Mitsui and Acer America. (PRESS RELEASE) Infospace Inc. has a market cap of $295.5 million; its shares were traded at around $8.37 with a P/E ratio of 76.1 and P/S ratio of 1.9.
Highlight of Business Operations:
Content and distribution costs from continuing operations for the three months ended September 30, 2009 increased to $34.0 million from $18.3 million for the three months ended September 30, 2008, primarily due to increases in revenue from search results delivered through the Web properties of certain of our distribution partners.
Other income, net for the three months ended September 30, 2009 was $472,000, as compared to $1.5 million for the three months ended September 30, 2008. The decrease was attributable to a decrease in interest income as a result of a decline in interest rates from the rates during the three months ended September 30, 2008. Additionally, we recorded an income tax benefit from continuing operations of $32,000 for the three months ended September 30, 2009, as compared to tax expense of $548,000 in the same period in 2008. The tax expense for the three months ended September 30, 2008 primarily consisted of certain non-deductible permanent differences, which did not recur in the three months ended September 30, 2009.
The second type of ARS has no maturity date and, in the event of default or liquidation of the collateral or ARS trust by the ARS issuer, we or the ARS trust are entitled to receive non-convertible preferred shares in the ARS issuer; ARS of that type are also known as auction rate preferred securities (“ARPS”). For the remaining ARPS which have a fair value above zero ($0), for which we originally paid $7.0 million, there was a single issuer, and we determined their fair values to be an aggregate $850,000 at September 30, 2009 by using discounted cash flow models for the ARPS trust payments, weighted by our estimated probability of trust default. The models relied upon certain unobservable inputs, including our estimate of the holding periods, which was 40 years, the annual discount rate applied to future cash flows, which was primarily based on the historical credit default swap rates for the ARPS issuer, ranging from 6% to 7% in excess of LIBOR, our estimate of the probabilities of trust default, which was 0%, and the recent sale of preferred shares which replaced certain of our ARPS, as discussed below. Considerable judgment was used in weighting the variables for determining fair value.
For the three months ended September 30, 2009, our net income was $1.8 million. We have incurred net losses on an annual basis for all but three of the years since our inception. Additionally, we have incurred a net loss for the year to date and as of September 30, 2009, had an accumulated deficit of $1.0 billion.
Systems and network operations expenses decreased by $1.2 million to $7.2 million for the nine months ended September 30, 2009, as compared to $8.5 million for the nine months ended September 30, 2008. The absolute dollar decrease for the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008 was primarily due to decreases of $755,000 in stock-based compensation expense and $747,000 in expense for contractors to augment our staffing.
Product development expenses decreased by $3.7 million to $4.2 million for the nine months ended September 30, 2009, as compared to $7.9 million for the nine months ended September 30, 2008. The absolute dollar decrease for the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008 was primarily due to a decrease in stock-based compensation expense of $2.0 million, a decrease in personnel-related expenses, excluding stock-based compensation expense, of $1.7 million, and a decrease in professional service fees of $690,000. These decreases were partially offset by an increase in employee separation costs of $572,000.
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