Shares of CMGI Stay Range-Bound
individualinvestor.com
by Alex Yakirevich, (9/13/99)
Shares of CMGI continue trade in the $80-$90 range. That is
surprising, considering the strong gains posted by other high
profile net stocks in recent days.
Perhaps is it a dearth of market-moving news. The only
tid-bit in recent days: CMGI and Compaq (NYSE:CPQ -
Quotes, News, Boards) closed the AltaVista transaction on
August 19. Since the acquisition was first unveiled a little
over two months ago, CMGI has made considerable
progress in transforming AltaVista into one of the top
contenders in the portal space. The search engine
successfully introduced its FreeAccess Internet connectivity
service in early August, and this has translated into some
225,000 new subscribers being brought on board during the
first two weeks following the rollout.
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On the other end of the equation, CMGI's portfolio
companies are already benefiting from the strategic alliance
with Compaq. Engage Technologies (Nasdaq:ENGA -
Quotes, News, Boards), for example, is now providing its
customized online advertising solution to Compaq.com.
In addition, Ancestry.com has also struck a strategic
alliance with Compaq. According to the agreement, Compaq
will be the preferred PC supplier on the Ancestry.com and
MyFamily.com websites, while the two companies will
cross-promote themselves.
The shares could get a lift in coming weeks as investors
more closely focus on CMGI's Directed Share Distribution.
Investors holding at least 100 shares of CMGI may be able
to get shares at the offering price in an IPO for Navisite,
which is scheduled to take place later this month. To
participate, an investor would need to set up an account with
Wit Capital (Nasdaq:WITC - Quotes, News, Boards),
which handles the distribution of shares, and register the
account for the distribution program.
Another catalyst for the stock in coming weeks should come
from Wall Street analysts. Many think the stock should join
in on the recent rebound in net stocks. Paul Merenbloom of
Prudential Securities thinks CMGI's current public and
private holdings are worth as much as $151 per share, or
80% above current levels.
Whether CMGI fetches such a valuation any time soon
remains to be seen. However, with AltaVista as one of the
potential candidates in the list of three to four private
companies up for an IPO in the next six to twelve months,
shares of CMGI are poised to move to the higher ground.
We reiterate our Buy rating of CMGI.
Analyst: Alex Yakirevich
Updated on September 13, 1999 with CMGI at $89.31
Recommended on 11/16/98 at $18.48
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