Infospace, which is in the midst of trying to a major shareholder dissent, has its annual stockholder meeting coming up May 31.
Sandell Asset Management, a investment management firm that owns about 8.8 percent of Infospace shares (largest shareholder for the company), has filed its proxy statement with SEC and some interesting view on why it thinks INSP dropped the ball: “We believe that this poor performance has been caused by 1) investment in a risky, and ultimately failed, mobile growth strategy, 2), failure to maximize profitability and drive growth at Online and 3) complacency over costs and poor internal controls. The investment into the mobile content business was a poor decision as the business had high costs, low margins and few barriers to entry. Once InfoSpace had invested the capital, proved the market opportunity and helped carriers achieve scale, the decision to go direct for the carriers was inevitable and should have been foreseen by management. During the time that management was focused on mobile, the internet search industry was in a period of rapid growth and aggressive capital investment. Competitors such as Google, Yahoo, MSN, AOL and Interactive Corp successfully grew their search-related businesses rapidly through innovation and investment.

We readily acknowledge that InfoSpace’s Online segment does not have the audience or market positions of these other companies, but we are confident that with greater focus, better results were achievable. On the cost side, we believe that management lost its focus on cost containment and allowed the downward trend of corporate expense to reverse and begin to increase after 2003. We are also concerned about some of the allegations regarding the company’s internal controls in the recent $100 million lawsuit filed by EMI against the company earlier this year. While we support the company’s assertion that the case lacks merit, should EMI win a material judgment against InfoSpace, the disaster of the mobile content business would be indisputable.”