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InfoSpace kills direct-to-consumer content business following $46.7M net loss

BELLEVUE, Wash.—InfoSpace Inc. reported a net loss for the third quarter and announced plans to halt investment in its direct-to-consumer content business, including its recently launched Moviso storefront. Instead, executives said, InfoSpace will refocus on bringing its success in online search into wireless.

Shares of InfoSpace fell slightly to $19.80 per share following the news.

The news marks the latest in a series of setbacks for InfoSpace, which tried to boost its direct-to-consumer business at CTIA Wireless I.T. & Entertainment 2006 by having skateboarding pro Tony Hawk perform. Since then, though, the company lost a major carrier customer—Cingular Wireless L.L.C., which will work directly with music labels for ringtones rather than go through InfoSpace—and outlined plans to lay off 250 of its 670 employees.

But while the company could still be well positioned to cash in on the wireless playground—it has more than $400 million to fuel any initiative—it looks increasingly likely that InfoSpace will redirect its efforts toward its online businesses.

“I would not cross mobile totally off the page yet,” said James Voelker, InfoSpace’s chief executive officer, in an earnings call transcribed by SeekingAlpha.com. “Remember, we still have a really good, thriving services business here in mobile, so it’s possible there will be things out there that could enhance it, but if you are thinking about the mobile content side… you are right. It is highly unlikely we would be investing there.”

In the third quarter, InfoSpace posted a net loss was $46.7 million, which reverses net income of $11.3 million reported during the same period last year. The net loss includes a restructuring charge of $57.8 million.

Revenues for the quarter were $96.3 million, a 16-percent increase from revenues of $83.2 million during the third quarter last year. Analysts expected the company to report revenues of $95.9 million. Mobile revenues increased 22 percent to $47.7 million for the quarter.

For the fourth quarter, InfoSpace expects revenues to be between $91 million and $93 million, lower than analyst estimates of $100.95 million.

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