DLJ STARTS INTUIT Tracking unusual activity this week on INSW, Picking up speculation of merger/aquisition potential. Stock is well off its highs of $40's and has $75 million in cash... Restructuring plans gave a small boost to InsWeb (Nasdaq: INSW - news), an
online insurance provider. InsWeb, which announced that it will slash its
workforce by 40% in the next two quarters, saw its shares rise 10.6% to 3
1/4.
InsWeb, which helps link consumers with auto, health, home and life
insurance providers over the Web, said its restructuring efforts are
intended to cut operational costs in order to expand its online
insurance-agency business and help boost revenues.
The expected 40 percent staff reduction will result from initiatives or
business units that will be discontinued as part of the company's overall
consolidation efforts, Redwood City, Calif.-based InsWeb said in a
statement. The discontinued units or business focuses will be areas that
are not considered part of the company's core business model.
Backed by Japanese Internet investment company Softbank, InsWeb, which
last year enjoyed a successful public offering, got caught in the recent
downdraft that weighed down most Internet stocks. The company's market
capitalization has dropped to $103 million from approximately $544 million
last year.
InsWeb has also seen heightened competition with the recent popularity of
online marketplaces. In recent months, several online marketplaces aiming
to serve the insurance industry have popped up, such as one unveiled by
health giants Baxter, Johnson & Johnson, GE Medical and others.
For the second quarter, InsWeb said it expects revenues to be
approximately $5 million and intends to take one-time charges related to
the planned restructuring and discontinuation of Benelytics, a health
insurance firm InsWeb acquired last January. Due to some anticipated
near-term effects from the restructuring plans, the company also said it
estimates that quarterly revenues for the rest of the fiscal year will be
"significantly lower" than originally projected.
InsWeb said the restructuring efforts, as well as its more than $75
million in cash and short-term investments as of March 31, will give the
company enough cash to operate "comfortably" through 2002. InsWeb expects
it will begin generating profits by 2002.
The company also announced the promotion of Mark Guthrie to the position
of president, adding to his existing role as chief operating officer.
Guthrie, 39, will help guide the company's new initiatives, including
plans to consolidate its corporate headquarters and operations and
relocate them to the Sacramento, Calif., area later this year. 
