Analyst Predicts Hard Times for InfoSpace

InfoSpace is in serious trouble, according to an WR Hambrecht & Co. analyst quoted in a story published online today by the Associated Press.

The company, which has carved out a niche for itself as a content aggregator and search provider for wireless operators and their subscribers, will be under increasing pressure as content providers, such as Walt Disney Co. and Time Warner Inc., seek direct relationships with wireless operators; and as search giants, such as Google and Yahoo, increasingly move into InfoSpace’s territory.

At least, that’s what Denise Garcia, the WR Hambrecht & Co. analyst, suggests.

Actually, her argument seems reasonable and sound, and all indications point to the end of what has been an up-and-down roller-coaster ride for InfoSpace. It managed to squeeze out an existence from dealing with wireless operators, and for that it should be commended, but the golden age of the content intermediary (or middleman) would seem to be coming to an end. There’s too many of them, particularly now that the major content providers are insisting on their own direct relationships with the mobile service providers. 

So, what will happen to the company? Writes Garcia:

We do believe InfoSpace makes an attractive acquisition target for a mobile content aggregator seeking to expand its mobile content library or media company wanting to expand its content delivery platform

But Garcia says the company is overvalued by the public market at the moment, and that its price must fall before it can become sufficiently attractive to a buyer. That, too, sounds like a reasonable assessment.