BELLEVUE, Wash.-Shares of InfoSpace Inc. slid more than 25 percent Wednesday and several analysts downgraded the stock after the Web search and mobile content company issued a disappointing second-quarter forecast.
InfoSpace reported first-quarter revenues of $87 million, up 81 percent from last year’s first-quarter revenues of $48.1 million. The company also reported net income for the quarter at $93.9 million, or $2.53 per share, more than doubling 2004 figures of $36.7 million, or $1.03 per diluted share.
The company received $7.3 million in the quarter from a lawsuit against the founder.
But the second-quarter outlook was well below expectations as InfoSpace projected revenues of $83 million to $85 million, or 36 cents to 39 cents per share-about 5 cents per share less than analysts had expected. Research firms First Albany, Oppenheimer and Raymond James each downgraded the stock, with First Albany and Oppenheimer moving from a “buy” recommendation to “neutral.”
Albert Lin, director of research at American Technology Research, said the disappointing forecast in part may be due to carriers’ efforts to curtail “overly aggressive” marketing efforts by content providers such as InfoSpace and VeriSign.
“While we see a healthy growth industry remaining after this examination,” Lin wrote, “we believe that segment of the industry will experience a slow-down which may feel like a train wreck compared with the recent months of hyper-growth. INSP (InfoSpace) and VRSN (VeriSign Inc.) are considered two of the leading companies in the area and may be impacted no matter what they do.”
Shares of InfoSpace, which have ranged from $26.50 to $57.92 in the last year, dipped $11.53 to $33.46 in mid-day trading on the Nasdaq Wednesday.
