Kudos to Zen Warrior: you have predicted about CMGI's earnings way before analysts took into account sale of Geocities to Yahoo. Kernen will undoubtedly pooh pooh this as one time event, or is it? Apparently the market disagrees. Stay tuned tomorrow when the news is out.
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INTERNET STOCK NEWS(TM): September 27, 1999 "Will "Rock Your World" Earnings Move CMGI?" by Mike Ogburn, ISN Writer Also available on the web at internetstocknews.com
SAN DIEGO--(BUSINESS WIRE)--Sept. 27, 1999-- A flurry of activity and even some "skunkworks" secrecy create quite a contrast to CMGI's rather mundane stock price action, which has been stuck in the 70-90 range for weeks.
The venture capital and Net incubator company's stock is down 50% from its April highs, despite continuing to do what it does best. It has invested in new start-ups and acquired companies such as Alta Vista, Cha! Technologies and AdForce (Nasdaq: ADFC). It has spun off strong IPOs such as Engage (Nasdaq: ENGA), Chemdex (Nasdaq: CMDX), Critical Path (Nasdaq: CPTH) and Silknet (Nasdaq: SILK), and formed new alliances with the likes of Compaq and Hong Kong's Pacific Century CyberWorks. And sometime this month, it is expected to unveil details about its mysterious Net broadcasting company, iCast.
All that going for it -- yet the stock rarely moves. Meanwhile, an upstart like Internet Capital Group (Nasdaq: ICGE) blows past CMGI in market cap despite not even being half the company. What CMGI (Nasdaq: CMGI) needs is a catalyst, something to give it momentum.
That may come in the form of a potential blowout quarterly earnings, scheduled to be reported after the bell on September 27.
Interesting (but hardly noticed) changes in First Call's consensus earnings estimates lead one to think such a move is imminent. On Monday of this week, the First Call average estimate predicted CMGI would lose $.17 for the quarter. Today, that estimate now reads that CMGI will earn $2.47. If indeed the new number is even close, this may classify as the biggest upward earnings adjustment in history.
Apparently, company officials are letting word out that CMGI's sale of Geocities to Yahoo (Nasdaq: YHOO) will add several hundred million or so to the company's bottom line this quarter. Sure, CNBC's Joe Kernan will scoff at such a large earnings number and describe it as a "one-time" event, but the fact is that CMGI seems to deliver a "one-time" event like this every year.
In light of the possible eye-popping earnings, the iCast announcement and the upcoming Navisite (NAVI) IPO, CMGI could begin another of its famed runs. After all, at this point, the company appears to be an undervalued Internet (pundits would call that an oxymoron).
After Monday's earnings report -- if the numbers fall where expected - CMGI will be trading at a PE of less than 40. That's a low multiple for the stock that has recorded the top return on investment since 1995.
The value of its share of publicly held companies, at $4 billion, is already equal to half of the company's market cap of $8 billion. It paid an additional $2 billion for Alta Vista. That means the market is valuing CMGI' s other 40-plus companies -- including iCast and Navisite -- at only $2 billion.
Considering CMGI's track record of turning $5-10 million investments into billion-dollar companies (see Lycos, Geocities and possibly Engage), a few of those 40 holdings are likely to strike it rich. That equates to more "one-time" events in the future and more of Joe Kernan shaking his head.
And maybe, just maybe, that means CMGI will continue to climb free from undervalued trading ranges.
Article also available on the Web at internetstocknews.com
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