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CMGI Inc. Shares Climb Following Baird Conference Presentation
Ant & Sons submits: CMGI Inc. (NASDAQ: CMGI) came back into the spotlight recently after TheStreet.com's James Altucher said the stock was worth a look because it had "$47 million in operating cash flow last year and has almost $200 million in net cash in the bank. With an enterprise value of just $421 million, CMGI trades for just nine times cash flow, putting it in buyout territory." Another reason is that Renaissance Technologies, a hedge fund management company, has bought shares of CMGI. With retail investors building demand for the stock on the press coverage, CMGI shares spiked higher on heavy volume.
Yet, the company's latest earnings call in which the company forecasted revenues of approximately $1.10 billion in fiscal 2007 and full year gross margin improvement, did not seem to excite investors as much and shares slid. However, the stock has turned and is rallying following its presentation at the Robert W. Baird & Co. 2007 Business Solutions Conference. It's probably not much of a stretch at this point to believe that funds previously interested in the company are again scrambling to step up their accumulation of CMGI as retail investors eat away at the supply of shares. In late afternoon trading, CMGI closed up by 8.44% to $1.67 on volume of 31.6 million shares (average daily volume is just 5.4 million shares).
Brief notes on the conference presentation include highlights of a successful turnaround in 2006, with $16.6 million in cash flow from operations and a strong balance sheet with more than $225 million in cash. The company expects $1.10 billion in fiscal 2007 revenue and full year gross margin improvement. More specifically, the company is targeting 12-14% gross margin, 7% sales and administrative expenses and 5-7% operating margin as a percent of revenue in the coming year. This compares with 10.3% gross margin, 10.2% sales and administrative expenses and .05% operating margin as a percent of revenue in 2006. Finally, the company expressed optimism in its ModusLink supply chain business, expecting double digit growth in the supply chain service provider market and indicating that it could gain a more significant market presence as eight direct competitors account for just 10% of the market. |
