Re: Adam, Linda! CMGI Moral Support Needed Desperately

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From: Linda (
Date: Mon Sep 25 2000 - 14:43:02 PDT

Hey Jeff, rbfar... I hear 'ya!

I don't have Level II quotes since I usually can't watch the Markets
during the day. I have end of day data feed, which for some reason
seems not to be downloading right now. I'll try to answer your
your questions, Jeff, a little later this evening.

In the meantime, here's some more on CMGI.



CMGI pushes for profits
By Stephen Lucey, September 22, 2000

CMGI (Nasdaq: CMGI) is doing its best to convince investors that it is
in fact on the road to recovery. The company reported a fiscal fourth
quarter loss of $2.17 a share on Thursday, handily exceeding analysts'
consensus estimates of a loss of $2.45 per share, according to First
Call, which tracks analysts' earnings estimates. CMGI reported revenues
of $377.2 million, a 62 percent increase from the fiscal third quarter.

The market clearly had a mixed reaction to the news. Shares of CMGI
fell $1.94 to $34.50 in after-hours trading on Thursday but did manage
to rebound and open slightly higher Friday morning, despite Thursday's
market-shaking earnings warning from Intel (Nasdaq: INTC). U.S.
Bancorp Piper Jaffray analyst Safa Rashtchy says the announcement was
a "sigh of relief." But he adds that the company has a lot of work to
do going forward.

CMGI recently announced a massive organizational restructuring.
Analysts say that its reorganization from two divisions -- a venture
arm and an operating company -- into six specific, focused identities
is exactly what CMGI needed. The six new divisions include: e-business
and fulfillment, search and portals, infrastructure and enabling
technologies, Internet professional services, interactive marketing,
and CMGI @Ventures.

And although CMGI chairman and chief executive officer David Wetherell
announced on Thursday that he expects five of the six newly named
business units to reach profitability by 2001, he did point out that
the infrastructure and enabling technologies unit needed a
considerable amount of work before it would also become profitable.

While it was encouraging to hear that most of the operating companies
will be profitable by next year, this is still an environment in which
investors are demanding solid revenue streams and defined paths to
profitability, so the uncertainty surrounding the infrastructure unit
is cause for some concern.

According to Ullas Naik, an analyst at First Albany, the new business
units are a step in the right direction for the company. But he
expects investors to remain less than 100 percent bullish on the
stock until CMGI clearly defines each unit to Wall Street and how
they are executing under the new structure. To that end, CMGI plans
to give the Street additional guidance on the new business units, as
well as the management teams running each one, in the upcoming

Up until this spring, many investors viewed CMGI as an opportunity to
take advantage of the Internet boom. There was little concern about
the companies CMGI was placing in its incubator nest. Investors felt
that the exposure to anything that even remotely resembled an Internet
company would give them the massive gains they desired.

CMGI's stock skyrocketed 600 percent in 1998 and another 940 percent
in 1999. But after the bull market for Web companies came screeching
to a halt earlier this year, the Internet incubators were hit
particularly hard and fell out of favor as fast as they became the
darlings of Wall Street. CMGI now trades 78 percent off its 52-week

Mr. Naik expects the discerning attitude toward incubators to continue.
In fact, he expects consolidation in the sector, which will cut the
roughly 1,000 incubators in the U.S. alone down to about 200 companies
in the next two to three years.

This reality became painfully evident to CMGI, which was the reason
for the restructuring of the company. By providing investors with the
opportunity to peer inside their nest and witness the pressure they
are applying to their majority-owned operating companies to achieve
profitability, CMGI is obviously hoping investors will again embrace
the stock.

As part of this increased focus on profitability, CMGI has announced
staff cutbacks in two of their main subsidiaries: Engage
(Nasdaq: ENGA) and Altavista, which cut 13 percent and 25 percent
of their workforce this month, respectively.

According to U.S. Bancorp Piper Jaffray, CMGI's four main revenue
streams come from their 88 percent stake in Engage, their 82 percent
of privately held Altavista, their 69 percent of NaviSite, and CMGI
Solutions (a provider of Internet professional services), which grew
substantially in March when CMGI acquired Tallan, an e-business
consulting firm.

There is some concern about how strong revenue gains will be in the
coming quarter due to the decline in dot-com advertising budgets and
online advertising in general, but Mr. Wetherell said he remains
confident about the strength of each of the companies in his
organization. CMGI once again announced plans for an initial public
offering for Altavista. The IPO has been postponed twice this year
but Mr. Wetherell said the company is now looking at taking Altavista
public by the end of the first quarter of 2001.

But CMGI's stock price may not recover so soon. Perhaps the best way
for investors to consider the company's situation is through a sports
analogy. CMGI announced last month its new affiliation with the New
England Patriots, whose new $325 million football stadium will bear
the name "CMGI Field." Comparing the ailing Patriots and the
sinking stock price of CMGI seems quite appropriate.

The Patriots played in the Super Bowl just three years ago but this
year are still searching for their first win. CMGI is also in a
rebuilding period following its stock's 75 percent plummet since
March. While the Patriots are trying to build a championship team
in time for the opening of CMGI Field in 2002, CMGI hopes its recent
restructuring will get the company to the land of profitability by
then as well -- if not sooner.

If CMGI cannot prove to Wall Street that its new organizational
structure will lead them to the earnings end zone, then the Patriots
might want to look for a new name for their stadium. No one wants
to be associated with a washed-up Internet company.

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