infoUSA: Fear Is Scaring Away Greed

It sometimes takes courage to buy when the faint of heart are fleeing. In investing, like in life, cliches abound that command us to go against the grain and be greedy when others are fearful. However, equally important are the words of Kenny Rogers who advised that one ought to know when to hold 'em, and know when to fold 'em. These are the thoughts pulsing through my brain at the moment as I reflect upon one infoUSA (IUSA).

The company, which operates salesgenie.com and peddles various marketing lists, elicits in me the great, dichotomous emotions of investing: greed and fear. First, a quick digression. I came by infoUSA while reading a recap of this year's slate of SuperBowl ads. For the second consecutive year, infoUSA ran ads for salesgenie.com that were universally panned as unfunny and somewhat more selectively panned as racist. I watched and I remember the ads well.

They were fairly terrible especially by SuperBowl standards. I confess, this interested me. If the company minted money selling their various marketing wares, I could barely care if the ads were atrocious. And, actually, it occurred to me that the ads in question were so bad they were in fact remarkably memorable. Since I know next to nothing about sales leads, I had to check the story from the grassroots up. Some of what I found excited me. Other tidbits terrified me.

The company isn't quite minting money, but it's doing fairly well. infoUSA registered approximately $688 million in sales in 2007 versus $435 million in 2006. So far so good. Furthermore, the company declared a quarterly dividend of $0.35/share in January, good for a 4% yield. Most interesting was the fact that the company trades at a p/s ratio of just .75 while growing profits at about 14% year over year. Plus the cash/debt situation is sterling.

I was intrigued. This thing is just too cheap, I thought. And I started to get a little greedy. Then I stumbled upon some other news.

I can't say I was one hundred percent surprised to learn that management might not be super shareholder-friendly. Call me prejudiced, but there is something a little off-putting about a company that sells sales leads and marketing lists, I guess. But I digress. Further research indicated that Chairman and CEO Vin Gupta operated a travesty of an annual meeting in the summer of 2007 and (in addition to off-color SuperBowl ads) seems to enjoy floating company cash to hobnob with the who's who of American politics. The company, the more I researched, seemed to ooze sleaziness.

And in crept the fear. These guys can't be trusted with my money, I thought. And, as quickly as the thought had come to me, I decided I'd put infoUSA down for the time being. Perhaps, if management can promote a sense of competency, I will review this case in the near future.

Comments

[Richard Shi...:]

FYI, I subscribe to Sales Genie. My marketing manager clled yesterday to see when our contract was up. The sales rep said you are on month to month and we will lower your rate from $250 to $150 per month. We didn't even ask, they just did it. Kind of nice for me.

2008 Feb 06 11:19 AM

[Whussup:]

Whoa, dude...infoUSA creates a great business and consumer database...they dump millions into it to keep it accurate and current - take a trip to Omaha sometime. I have and use the data to drive my very large company. Why would anyone care where the $ goes, it's great data at reasonable prices and the delivery technology keeps getting better. When you fill your car with Mobil gas next time, and your car runs great - take a look at what goes on to make that happen and you realize you picked on Vin, a relative Mr. Rogers in the world of corporate greed and exploitation - it's sales leads for God's sake.

2008 Mar 11 01:32 PM