Just uttering the name “InfoSpace” should make investors who were around during the 1990s’ tech bubble a little wistful.
You may never have heard of this little Internet search company, but to me it’s one of those names that harkens back to the days when Internet stocks were the only thing anyone wanted to talk about, and prices roared to the sky. It was a bubble, to be sure, but what a great time of optimism and imagination.
InfoSpace (NASDAQ:INSP) was founded by former Microsoft (NASDAQ:MSFT) executive Naveen Jain, and I remember him getting up in front of a big crowd at a Hambrecht & Quist conference in San Francisco and declaring he planned to build the company to a size that would eclipse General Electric (NYSE:GE).
He disappeared a few years later after a falling out with the board, and the future didn’t quite turn out the way he expected, but it’s actually very cool to see that the company has survived. And you’ve probably used its technology without even knowing it.
InfoSpace’s mission statement is to “make the discovery of information faster, easier, and more relevant.” It’s hard to argue that it hasn’t accomplished this objective, as its proven relationships with Google (NASDAQ:GOOG), Yahoo (NASDAQ:YHOO), Microsoft and many others attest.
At the heart of InfoSpace’s success is its proprietary Metasearch technology, which provides users with what InfoSpace calls “best of the best” search results. Think about how you typically search the Internet for information. Chances are if you want to know when that new Brad Pitt movie you heard about comes out, you pull up Google (or Yahoo) and type “new Brad Pitt movie” into the search box and wait for your results.
Well, Infospace provides a search algorithm that combines the relevant answers from better-known search engines such as Google, Bing and Ask.com and provides them to business customers as a “meta-search” engine or to consumers through sites like Dogpile, MetaCrawler, WebCrawler and WebFetch.
InfoSpace provides customized and private-label Metasearch solutions and portal services for destination sites, Internet service providers and international news organizations. Its technology is incorporated in nearly 100 partner sites, including those specializing in content, community and connectivity.
Despite InfoSpace’s rocky history after its founding in 1996, it has been one of the few smaller firms to survive, and now it has become surprisingly strong. Chief Executive William J. Ruckelshaus has been in charge since April of this year. He was previously a board member starting in 2007 and earlier held executive positions with both Credit Suisse (NYSE:CS) and travel website Expedia (NASDAQ:EXPE).
InfoSpace has increased revenues by 20% annually the last three years, and earnings by 85% from a year ago. It’s financially strong with no debt and over $77 million in cash on the balance sheet. Additionally, in September it secured a $100 million credit facility for expansion and acquisitions.
You may have noticed a significant run-up in the stock; it’s nearly 30% higher in just the past month alone. This is in part due to its excellent performance the past quarter, but also to increased speculation of a potential buyout by the likes of Yahoo and others. Stop searching, momentum traders. You have arrived.