From: Linda (joelinda1@home.com)
Date: Thu Sep 07 2000 - 18:43:13 PDT
[Adam wrote to me:
<<And what's with CMGI? Oy.>>
Technically, CMGI looks like it's found a bottom. It's just these
"garsh darn" (Tom's words :)) news releases that create uncertainty;
most analysts continue to have no idea how to value this stock. And
institutions certainly don't like uncertainty, as seen in today's
7.5% drop in response to this news.
It does look like there is money rotating into the Internets as a
group, though. The INX, DOT, GIN, all look strong particularly
in view of Nasdaq's little correction. Hopefully that will keep CMGI
afloat.
Linda]
http://www.thestreet.com/tech/internet/1069698.html
Pushing for Profitability, CMGI Strikes a Blow for Clarity
By George Mannes
Senior Writer
9/7/00 1:01 PM ET
In the land of Internet stocks, where the phrase "path to profitability"
has become a sacred chant, you're never too big to get religion.
That was the theme of CMGI's (CMGI:Nasdaq - news) Thursday morning
conference call with analysts, following the announcement of the
company's reorganization into six lines of business.
CMGI Chairman and CEO David Wetherell reiterated on the call that in
terms of revenue, CMGI is bigger and faster growing than Internet
bellwether Yahoo! (YHOO:Nasdaq - news). But his comments and the
company's reorganization served as stark reminders that size, growth
and a bushel full of venture capital investments make for a pretty
dim halo if you can't convince people you want to be saved from the
hell of unprofitability. With the stock down some 75% from its high,
CMGI is doing all it can to appeal to bottom-line watchers, though at
midday Thursday investors weren't taking the bait: The stock was down
$1.88, or 4%, at $44.81.
The Greatest of These Is Clarity
So seeking to persuade the market that CMGI's style is penny-pinching,
not prodigal, Wetherell and his followers are making a number of moves
to simplify its structure and focus on profitability -- and changing
how the company reports its results so that investors can get a better
idea of what the company is up to and how well it does it.
The No. 1 focus, Wetherell said in the call, was "improved path to
profitability" -- the P2P mantra being one he repeated several times
throughout the call.
To do that, CMGI is doing what it said it's been doing already:
reducing the number of moving parts among majority-owned companies.
Once it had 41 operating companies and now it has 17; eventually, it
will go down to five to 10 companies, either by merger or by selling
some off.
>From Two Arms to Six
What's new is how CMGI is going to be organizing this consolidation.
Up until now, it has divided the firm into two areas: on the one hand,
its @Ventures venture capital investment arm and on the other, its
majority-owned operating companies, including the AltaVista portal
and the Internet advertising firm Engage (ENGA:Nasdaq - news).
It's planning to shuffle the VC operations and the 17 (and soon fewer)
operating companies into six business segments: E-Business and
Fulfillment, Search and Portals, Infrastructure and Enabling
Technologies, Internet Professional Services, Interactive Marketing
and Venture Capital,.
Each of these segments, says Wetherell, represents opportunities where
the company believes it can grow and succeed. "We think we have carved
out areas where we can be a leader. Or are a leader," he said. In part,
that involves merging different companies in each segment and
eventually taking the resultant company public. For example, he said
that SalesLink -- which he said was profitable -- and uBid.com, the two
companies in the new E-Business and Fulfillment line, could be combined
and go public.
Let Us Facilitate
Another measure the company is taking to smooth the P2P is to appoint
what Wetherell tentatively (and awkwardly) labeled "lines-of-business
representatives" for each of the new lines -- people who wouldn't have
profit-and-loss responsibility for their respective segments, but would
act as "facilitators and observers," in part by sitting in on CMGI
board meetings. CMGI's @Ventures will also have a representative for
each of the five operating business lines so that the company can
better coordinate its venture investments with its day-to-day
operations.
To help investors get a better view of progress of the new structure,
CMGI will be making a major change in how it reports its finances.
Starting with its fiscal fourth quarter, which ended July 30, the
company will report separate results for each of its six business
segments, including revenue, operating expenses and operating profit
(or loss, as the case may be). The report is due Sept. 21.
Previously, the company (like Yahoo!, among others) broke out no
information about its operating companies (beyond filings by public
or slated-to-be-public companies like Engage, AltaVista or NaviSite
(NAVI:Nasdaq - news)). The move, says Wetherell, will make it
easier for Wall Street to follow the firm, and it might stoke the
company's appeal to retail investors. "It's easier for analysts to
write about five or six segments," he said, "than 17 operating
companies."
http://www.thestreet.com/brknews/internet/1069083.html
CMGI Reorganizes
By Tim Arango
TheStreet.com/NYTimes.com Staff
Reporter
9/7/00 9:01 AM ET
Internet company CMGI (CMGI:NYSE - news) will reorganize its 17
majority owned companies and its venture capital affiliate into
six business lines, the company said Thursday.
The announcement was the result of an ongoing strategic review aimed
at making the company's disparate businesses more efficient.
The six lines of business include: search and portals;
infrastructure and enabling technologies; Internet professional
services; interactive marketing; e-business; and venture capital.
In addition, CMGI cancelled its plans with Hicks, Muse, Tate & Furst
to launch an international venture capital fund. It will, however,
continue to co-invest with HMTF if opportunities arise.
"Internally, we have always evaluated the CMGI operating companies in
the context of their respective market disciplines, and have
demonstrated both consistent organic growth and a clear pattern of
strategic mergers and acquisitions to build on these five operating
segments," the company said in a statement.
Andover, Mass.-based CMGI will also integrate its three venture capital
funds into a single evergreen fund called CMGI@Ventures IV. In the
fourth quarter, the company will begin reporting its consolidated
revenues by operating segment, with its venture capital arm reporting
separately. The company is scheduled to report fourth-quarter earnings
on
Sept. 21.
CMGI closed Wednesday trading at $46.69, down $1.50.
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