InfoSpace Fails to Meet Wall Street Expectations - CEO Leaves

InfoSpace INSP (NASDAQ), which was originally formed back in 1996, has gone through a number of transformations over the years. Prior to the Dotcom bust, the company was a high flier, after the bust the firm came way back down to sea-level. The company operates a number of online search services that rely on metasearch technology. InfoSpace primarily serves content providers and a significant portion of its business is focused on the mobile space. Just recently, the company released its earnings for the third quarter which was disappointing and held an earnings call (Earnings Call transcript via Seeking Alpha). Shortly after the Earnings Call its CEO, William J. Lansing stepped down after only 21 months in the position (see the 8k). The company immediately selected William J. Ruckleshaus, a member of the firm’s board and a former CFO of AudienceScience and SVP at Expedia, to serve as the firm’s interim CEO until a successor could be found for Lansing.

Some people have looked at Ruckleshaus’ selection as an attempt by the firm to pursue more acquisitions (see a piece by John Cook on Seattle’s Tech Flash). I’m not quite as optimistic as Mr. Cook. Investors should keep a close eye on the firm and the steps Ruckleshaus takes over the next few months and also who the firm ultimately chooses to take over as the new CEO.

Shopping Channel ValueVision Ousts CEO

Value Vision Media VVTV (NASDAQ) which operates the 24 hour shopping channel ShopNBC last Friday ousted CEO and board member William J. Lansing. At the same time the company lowered the company's fiscal 2007 outlook. Lansing had been CEO of the firm since December 2003. The company named Chairman John Buck as interim CEO, effective immediately.

Value Vision has been struggling from inception. According to a story by Leslie Brooks Suzukamo for Pioneer Press,

Under Lansing, sales grew from $591 million in fiscal 2004 to $767 million in 2006 but lost money every year. Nearly all the company's revenue comes from its television and associated Web site shopping business, with jewelry the biggest category.

Back in May of this year, the company reduced its workforce about 14 percent after posting an operating loss of $7.4 million in its first quarter. The company also closed two outlet stores and consolidated its distribution operations into a single warehouse facility. The cuts failed to stop the decline. In August, the company reported its second quarter loss increased to $5.5 million. Shortly thereafter,

Lansing promised Wall Street he could drive up yearly sales to 6 to 8 percent.

It was not to be. Two months later the company's board felt compelled to act forcing Lansing to leave. Lansing, outside of institutional holders such as GE Asset Management (17.34%) and others is one of the largest individual holders of the company's shares (377,000 according to Reuters). Before Lansing was ousted, the company hired turnaround consultants Alvarez & Marsal to help the board develop ways to improve corporate performance. At the time, the board specifically went out of its way to emphasize the hiring of Alvarez and Marsal was not a turnaround situation. The company supposedly had a healthy balance sheet with $100 million in cash and no debt.

Keep a close eye on the moves the company makes over the next few months. If they manage to hire a very strong candidate with turnaround abilities and a thorough understanding of their specific business model there may be some real potential upside. As things stand, that might be a tall order.

Stay tuned.

For more:

Reuters