[Street.com] CMGI's Balancing Act Continues With NaviSite Funding Talk

Date view Thread view Subject view Author view

From: Linda (joelinda1@home.com)
Date: Sat Dec 02 2000 - 06:10:29 PST

[I know that some of you have an interest in NAVI. A nice gain of 35%
on Friday although the closing price of 3 3/8 is still 98% below its
high in March.

From CE Unterberg: "NaviSite's stock has come under dramatic pressure
due to: 1) concerns over its high revenue mix of dot-com customers
(60% last quarter), as well as its high mix of CMGI affiliated
revenues; 2) CMGI's recent announcement for the planned shutdown of
several dot-com investments, of which several were NaviSite customers;
3) the overall downturn in Internet outsourcing and ASP stocks, as
well as the NASDAQ; 4) the disclosure that NaviSite is in violation
of a debt agreement with a lender who could call the loan at anytime;
and 5) a general slowdown in e-commerce deployments. Indeed, our
research indicates that, not surprisingly, NaviSite's volume of
customer leads from regional web integrators has slowed materially
over the past couple of months."



CMGI's Balancing Act Continues With NaviSite Funding Talk
By George Mannes
Senior Writer
12/1/00 5:00 PM ET

Internet empire CMGI (CMGI:Nasdaq - news), which has been closing and
consolidating businesses to cut costs, had some more news on that front

The Massachusetts-based conglomerate, which owns some Internet
businesses and has minority venture capital interests in others,
issued a press release Friday to announce it was reiterating
"continued support" of its majority-owned, publicly traded subsidiary
NaviSite (NAVI:Nasdaq - news). In addition, CMGI said it hoped to
announce within two weeks a definitive agreement to provide a
 previously announced $80 million financing commitment to NaviSite,
an Internet infrastructure company that provides hosting and
outsourced application services.

Separately, ThingWorld, an interactive content developer funded by
CMGI, Microsoft (MSFT:Nasdaq - news), Intel (INTC:Nasdaq - news) and
other firms, announced it was cutting 70% of jobs and was in
discussions with unnamed strategic partners to sell its core
technology and services.

Balancing Act

Friday's news underscores a tenuous balance that CMGI has to strike
in the marketplace: On the one hand, because financing and enthusiasm
for money-losing Internet companies have dried up, the company has
to cut costs in its operations, and signal to the market that it's
serious about cutting costs. On the other hand, the company has to
persuade investors that its surviving operations are indeed ongoing
businesses -- not just next in line to be shut down or cut back.


Since the market downturn for dot-coms, CMGI has already pumped
additional financing into NaviSite, buying $50 million of NaviSite
stock in June. In September, according to a CMGI spokeswoman,
CMGI committed to supply $50 million in debt financing to NaviSite,
but subsequently raised the proposed size of the financing to
$80 million. It's that $80 million financing that appears not to be
proceeding as quickly as some investors had hoped. As of July 31,
NaviSite had $77.9 million in cash on hand, after reporting
$30.2 million in negative cash flow from operations and
$66.3 million spent on property and equipment in the fiscal
year ended July 31.

A NaviSite spokesman referred all questions to CMGI.

One investor familiar with CMGI, speaking on condition of anonymity,
says NaviSite is one of CMGI's more promising business operations.
"It's a fundamental service," says the investor, who holds a small
amount of CMGI stock.

The investor wasn't quite so optimistic about the long-term outlook
for some of CMGI's remaining venture capital investments, such as
online jewelry store Mondera and online art gallery NextMonet.com.
Recent casualties among their rivals include online jeweler Miadora
and auction site sothebys.amazon.com, which was folded into Sotheby's
Web site.

A spokeswoman for CMGI's venture capital business declined to comment
on the investor's appraisal of the companies' prospects.

CMGI stock rose fractionally Friday to $10.13, and NaviSite added
35% to $3.38

Date view Thread view Subject view Author view

This archive was generated by hypermail 2b29 : Sat Dec 02 2000 - 06:16:00 PST