Losses in its mobile content business spur major changes.
Mobile content and online directory provider InfoSpace is restructuring its mobile media business, including 250 layoffs.
Beginning this week and continuing into next year, the company plans to eliminate 250 positions, mainly in its mobile content business. The company announced last month that Cingular, its largest ringtone distributor, would begin to enter licensing agreements directly with record labels instead of using InfoSpace as a middleman.
Ringtone sales make up the bulk of Infospace's mobile revenue, which itself comprises half the company's overall revenue. During the first half of 2006, InfoSpace generated $89.6 million in mobile revenue, of which ringtones from record labels made up $55 million. InfoSpace's total revenue for the same period was $186.1 million.
The remaining portions of InfoSpace's business are mobile infrastructure and Web search, including pay-per-call ads from Jambo.
This quarter, InfoSpace expects to incur $6.5 million for severance costs, and between $6 million and $7 million in costs related to closing its Hamburg, Germany-based office and other facility-related charges, and to terminating certain agreements. It will add another $2 million in similar costs next quarter, along with as yet undetermined costs for "goodwill" and other intangible assets.
"These decisions, while difficult, are critical to the long-term success of InfoSpace," Jim Voelker, chairman and CEO of InfoSpace, said in a statement. "Despite the setback in our mobile media business, our online and mobile infrastructure businesses generate solid cash flow. In addition, we have a strong balance sheet with over $400 million in cash."
As part of the restructuring, InfoSpace's chief administrative officer, Ed Belsheim, will leave the company on January 1, and has resigned from the board, effective immediately. Belsheim has been at InfoSpace for six years.
Revolutionize your digital marketing campaigns at ClickZ Live San Francisco (August 10-12)!
Educating marketers for over 15 years, our action-packed, educationally-focused agenda offers 9 tracks to cover every aspect of digital marketing. Join over 500 digital marketers and expert speakers from leading brands. Register today!
Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.
Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.
With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.
US Consumer Device Preference Report
Traditionally desktops have shown to convert better than mobile devices however, 2015 might be a tipping point for mobile conversions! Download this report to find why mobile users are more important then ever.
E-Commerce Customer Lifecycle
Have you ever wondered what factors influence online spending or why shoppers abandon their cart? This data-rich infogram offers actionable insight into creating a more seamless online shopping experience across the multiple devices consumers are using.