[Barron's] Burn, Baby, Burn

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From: Linda (joelinda1@home.com)
Date: Mon Oct 02 2000 - 11:47:44 PDT


[While Naz is in midst of a panic sell-off, CMGI is getting hit
particularly hard thanks to another cash burn article in Barron's.
Apparently, CMGI has an estimated 7.6 months of cash left before it
needs to start selling equities.

Linda]

http://interactive.wsj.com/articles/SB970282099819009867.htm

[snip]
With market values depressed, the so-called incubator companies have
come under strong selling pressure, as institutional stockholders
abandon the holding companies. For example, Fidelity Investments
trimmed its stake in CMGI Holdings 50% in the second quarter. Pegasus
estimates that CMGI has only 7.6 months' worth of cash left to burn.
That excludes the value of the roughly $1.6 billion in Internet stocks
held in CMGI's portfolio. Of course, these could be sold to raise cash,
but probably only at discount prices if word got out that CMGI was
unloading its portfolio.

Internet Capital Group saw two of its largest institutional holders
sell big holdings in the second quarter: Fleet Investment Advisors
sold 5.8 million shares; Fidelity Investments, 1.6 million. (Neither
company would comment on its investment position.)

"These incubator companies operate on the assumption of a healthy
new-issue market," says Meckler of internet.com. "The whole incubator
model hinges on the ability of going public. When this doesn't happen,
serious problems can arise. There wouldn't be an incubator concept in
today's market."


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