THE DAY AHEAD: CMGi's kids doing just fine
By Larry DignanTDAIN
June 10, 1999 7:20am
ZDII
CMGi Inc.'s (Nasdaq: CMGI) earnings are due after market close Thursday and as usual investors won't be able to figure them out. But the buzz over the CMGi family of Net companies indicates the company is just fine.
It's not easy getting a read on CMGi, an Internet incubator that's a mix of a venture capital company, closed-end mutual fund and a startup.
For the record, First Call consensus calls for CMGi to report a loss of 13 cents a share. With investment gains, who knows what the company will report. Once you discount the hard-to-figure financials, however, there are plenty of reasons to be cheering CMGi right now.
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Anecdotally, times are pretty good. We know CMGi is doing OK because of the buzz surrounding its family of Internet companies.
Just a few weeks ago a then-weak initial public offering from SilkNet Inc. (Nasdaq: SILK), which was partially funded with CMGi venture funding, knocked the wind out of CMGi shares. Now we know SilkNet's problems were a matter of timing. SilkNet got its IPO gains, but just not the huge gains that are hard to come by these days.
SilkNet, which has held its gains, is holding up and Critical Path (Nasdaq: CPTH) dipped into the equity markets again with a secondary offering. But the market is always focused on CMGi's up-and-comers.
The most important announcement for a CMGi family member was put out by NaviSite, CMGi's Web hosting company on Monday. Dell Computer Corp. (Nasdaq: DELL) and Microsoft Corp. (Nasdaq: MSFT) bought stakes in NaviSite and gave the fledgling company a big dose of credibility.
Navisite, majority owned by CMGi, provides hosting services for companies such as Planet Direct and Raging Bull, which are not-so-coincidentally CMGi companies.
Another CMGi company that had some good news this week was Adsmart, an online advertising company. Adsmart landed some big-name clients and said it delivers 1.8 million impressions for its network. That's nice, but it's unclear how Adsmart would do going public now. There's a glut in the online advertising world.
And then there's Chemdex and Engage Technologies, two companies that have filed to go public. And let's not forget that CMGi got a $200 million investment from Gateway Inc. (NYSE: GTW) recently.
So when you're listening to the CMGi conference call keep in mind the "between the lines" items. Look for evidence about the performance of CMGi's companies and don't worry about the financial line items. CMGi makes all its cash through investments such as its holdings in Lycos Inc. (Nasdaq: LCOS) and acquired companies such as Geocities. CMGi is only as good as its next sale.
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