[Internet Stock Report] May Be Time To Buy CMGI

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From: Linda (joelinda1@home.com)
Date: Wed Sep 27 2000 - 06:26:04 PDT

[Here 'ya go, Jeff. Sentiment on CMGI might be starting to change.
Nasdaq futures this morning look like we are in for a bounce; could
just be a dead cat (technical) bounce, but even that will be welcome.
Naz is sitting right at the bottom of trading range. Will be
interesting to see what the volume and close are like today.


May Be Time To Buy CMGI
by Chris Nerney

September 26, 2000 - Well, this hardly can be the market reaction CMGI
(NASDAQ:CMGI) and its investors had hoped for in the wake of the
company's reorganization and much-better-than-expected Q4 earnings.

Though a loss of $633.7 million, or $2.17 per share, doesn't exactly
qualify as good news, it easily beat street estimates of a $2.45 per
share net loss.

But since CMGI released its fourth-quarter report after regular
trading hours on Thursday, shares have fallen 16% to $30.63 by
mid-afternoon on Tuesday and are in danger of dipping below $30 for
the first time in 19 months.

CMGI's precipitous ticker plunge this year (down 78% from the Dec. 31
close of $138.44) has been a nightmare for company shareholders,
especially coming after last year's phenomenal 940% gain.

The truth, though, is that CMGI was overvalued for much of last year,
as were most other 'Net stocks. More specifically, CMGI's "halo"
blinded many shareholders, who came to believe that 1) A bet on CMGI
was tantamount to a bet on the Internet economy (of course, you can
argue the same this year, for a dramatically different reason), and
2) CEO David Wetherell and crew were incapable of doing anything other
than pick emerging 'Net winners.

This year, however, CMGI shares have plummeted and a number of the
company's investments are hitting hard times, with several announcing
layoffs and one (Furniture.com) nearly shutting its doors before
receiving an emergency cash infusion.

So while the CMGI halo is gone, in its place investors may be looking
instead at a buying opportunity, for just as the market was
excessively generous to CMGI last year, now it may be going too far
in punishing the company.

The fact is that CMGI, unlike any number of emaciated 'Net players,
still possesses vast resources. Even at $30 per share, CMGI has a
market capitalization of $8.8 billion, placing it among the top 20
largest Internet companies.

In terms of revenue, only five other Internet companies  Cisco
Systems (NASDAQ:CSCO), America Online (NYSE:AOL), Amazon.com
can top CMGI's Q4 total of $377 million.

And while it's tempting to interpret recent layoffs at Engage
Technologies (NASDAQ:ENGA), AltaVista and iCast in a negative light,
these moves, along with CMGI's decision to reduce the number of its
majority-owned operating firms from 17 to five, indicate a company
taking serious steps to get its fiscal house in order and increase
shareholder value.

While it may not happen overnight, it doesn't have to, for unlike so
many one-note Internet companies whose business plans have unraveled
along with their stock prices, CMGI has been built for the long haul.
That halo may yet reappear.


"Six months ago, every single one of my clients wanted a name starting
with 'e' or 'i.' Now everyone is like, 'That is so 1999.'"
  -- Axel Aldin, Interbrand Corp., San Francisco

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