siliconinvestor.com
Hitting the Jackpot
A Silicon Investor Highlight
By David Zgodzinski
March 14, 2000
Jackpot Enterprises is a slot machine
operator in Nevada. Sounds like a good
business. On March 8, the company
announced that it was launching a
$100-million fund to become an Internet
incubator. Jackpot is going to change its
name to J Net Enterprises. Jackpot?s stock
popped 50 percent on the news. Evidently
the market figures that the company is
getting into an even better business.
An incubator gathers up lots of little
Internet eggs and sets them in a nice warm
nest lined with venture capital. Then the
incubator sits on the Internet eggs until
they?re good and ready to hatch into little
IPOs. The proud company watches over its
brood, seeing it get bigger and richer, and
then the incubator gathers more eggs into
the nest and starts the process all over
again.
CMGI is the mother hen of the incubator
business. Lately, the stock has been doing
well. CookiePuss wrote on March 6...
March and April should be strong
months for inut stocks in general
given they generally run up into
earnings season. IMO, this ain't the
top yet.
All the big Internet blue chips sold off in
January. AOL is down 40 percent from its
high, Yahoo is down 27 percent and
Amazon is down 40 percent. But there
have been signs of strength in the charge
to Nasdaq 5000. CMGI is down only 9
percent from its all-time high. The stock
has been stronger lately than the other
Internet blue chips. On March 2 Paulh
wrote to the CMGI What is the latest
news on this stock? thread...
Another nice upgrade. I see this
week as a superb buying opp. Next
week we have earnings which
should surprise positively. I picked
up a nice handful on Monday.
After peaking at $163 in the
end-of-millennium Internet buying panic,
CMGI backed down to $105 in February.
But the stock quickly reversed course,
heading back up as the IPO market began
to cook again. The day of the
second-quarter report approached, and
investors placed their bets. stock_bull69
wrote on March 5...
Some fool has been posting on RB
that he is shorting CMGI big time
tomorrow because of the expected
negative earnings! It's amazing
how some folks don't bother to
check and do the necessary DD
before making decisions like this.
We all know that if CMGI wanted to
have positive earnings they could
do so. (CEO) David Wetherell
simply knows the $ is better off
being reinvested in other startup
companies.
country bob wrote...
Agreed, stock-bull. Maybe this fella
figures the profits should be stored
in a savings account, gaining 3%.
Brokerage analysts are keen on the stock
these days. disu posted that Prudential?s
Paul Merenblum rates the stock a strong
buy, pointing out that 1stup.com,CMGI?s
free Internet access provider, is going
strong, giving away more and more
access.
Bulls on the thread are confident. Sowbug
wrote on March 3...
Sold a bunch of 175 Jan 2001 puts
earlier in the week at $71. Hello?
Will CMGI be higher than $175 in
10 months? Will my puts expire
worthless? (These are all
rhetorical questions.)
Paulh commented the following day...
I'm proof that you don't have to be
too smart to make a lot of money.
You've just got to be heavily
invested in CMGI. Investing really
is simple.
ZenWarrior counted the spoils of being a
bull, especially a CMGI bull...
Can't believe I've come this far
from just $4,500 15 months ago.
Now at $2.25 mil+, and I've taken
out a whole lot too! :-) Let's Rock!
...I want to see 4-5 mil before April
17 when the taxman/woman raids
my hoard!
On March 5, John Carragher posted a
consensus estimate for a $1.28 loss for the
quarter. Two days later he posted that the
estimates had been revised upward, with
analysts expecting only a $1.14 loss.
ZenWarrior wrote on March 6...
I'm looking for really good
earnings. We sold RagingBull, and
ENGA issued stock for
AdKnowledge. These should cover
most, if not all operating losses.
Larry S. discussed the possibilities of a
split...
CMGI shares authorized = 400 MM
shares issued and outstanding 279
mm. so- not enough shares to do a
split. would have to authorize
more. also, this is a low price for
them to consider split. think we
would have to see>>300 so will
have to wait a few weeks, gggg.
Dalin was happy to pick up more shares
on March 8...
Thank you Market Gods, for giving
me a chance to add some more
CMGI this morning. Should hit new
highs...oh...say....Friday.
But happy_girl wrote on Thursday, March
9, prior to the earnings release...
I'm surprised at the lack of
movement in the stock considering
the earnings are today....Maybe in
the afternoon....?
The stock did move higher in the
afternoon, up over $6 by the end of the day
and higher to $150 after hours. The
company reported a loss of 74 cents a
share, much better than expected. Frank
Ellis Morris was enthusiastic...
A much less loss than expected
and surging revenue of 249%
should make this stock rock and
roll.
DiB wrote...
Outstanding earnings. CMGI is on
pace to have 700 million in yearly
revenues and be profitable all by
itself excluding public holdings.
300 by September sounds very
achievable.
Scarecrow typed a live report of the
Conference Call...
(CEO)David Wetherell expects to
be $2-2.5B run-rate by 12/31/00
Anticipated IPOs: Alta Vista -- Now
in April, due to SEC delays CMGI
Solutions
@Ventures
NaviNet
MyWay
Furniture.com -- now in registration
MyFamily
The future looks fertile for the company as
it continues to bring new offspring to
market. CMGI remained strong into the
next morning?s trade. But just as night
follows day, there is selling on the news.
The thread is used to it. As Scarecrow
wrote...
Time for the onslaught of the
"end-of-world"ers...
DAX KIMPO added...
If the Street tries to ignore the
great earnings for whatever reason
they have, don't feel disappointed.
Instead try to use it to our
advantage. At least it will provide
us one more time to add cheap on
our position. The Street will
eventually acknowledge the great
performance of this company, and
once they do we'll look at these
analysts as fools.
But CookiePuss warned about the short
term...
Take a look at the calls to puts
ratio on CMGI. There's a huge
imbalance right now and if you
believe in the options expiration
theory, the stock should move
lower from here b4 next Friday.
Should trade between 130-140
next week based on outstanding
calls to puts.
The stock traded down $9 to $136.50 the
day following the report.
The umbrella organization provided by
CMGI helps create economies of scale.
And there is synergy between the various
component companies that are partially
owned by CMGI. Web hosting, advertising
and other functions are handled for one
CMGI company by another.
The relative strength of the incubator
stocks may be due to market logic.
Perhaps investors are beginning to see
that retailing on the Net is due for some
tough sledding. High fuel costs could make
shipping individual items expensive. The
big service providers like AOL are hard
pressed with the plethora of free ISPs.
Maybe that business is a bad investment.
But the stock market is hot, and IPOs fly off
the shelf. Perhaps the only sure way to
make money on the Internet is by selling
Internet companies.
While CMGI buys and sells companies that
are mostly in the consumer business -
outfits like AltaVista, Lycos, AuctionWatch
and 1stUp.com - Internet Capital Group is
primarily an incubator of B2B companies.
The stock blasted off from $80 to $212 in
the month of December during that month?s
B2B blowout, but faded quickly as insiders?
locked-up shares started to hit the market,
and the company did a secondary offering.
Having gotten ahead of itself, the stock
faded below $100 by the end of February.
DlphcOracl wrote to the Internet Capital
Group LLC - ( Nasdaq- ICGE ) thread...
I do not know when ICGE's sale of
lock-up shares is completed. I do
remember that it was multi-tiered
and extended over a three-month
period. I think that there is still
significant number of shares slated
for release in mid-March.
Larry Zenith called for the cavalry...
Merrill just underwrote the
secondary for ICGE at 108. It has
to defend this baby, since this
baby has a slew of IPOs coming.
Merrill could not afford to lose it.
Henry Blodget, it's time to get out
of den and say something.
Then things turned around fast. Mohan
Marette wrote on Feb. 28...
ICGE's next IPO ONIVA (ONVI) to
hit the market in the next couple of
days. ICGE stake in the company
is about 23%. According to CEO
Buckley there are 6 partner
companies in registration and 11
other being readied for IPO, all to
be out this year if market
conditions permit.
Onvia raised $168 million in the IPO and
jumped 212 percent when the stock
debuted on March 1st. Mohan Marette
added on Feb. 29...
LinkShare, another ICGE company
IPO to hit market soon.
Leeza Rodriguez was keen for that
launch...
Linkshare is going to be a monster
because it has a no-gravity biz
model. They will get a cut of the
entire e-tail distribution channel
(b2c, b2b). They are the reason I
bought ICGE on the first day of
trading.
still learning summed up the situation...
ICGE NAV is now at $5.25 B after
adding in 2.66 mm ONVI, still have
UAXS to go and others in the
pipeline. By midyear, we may well
get to $10-12 B in publicly traded
holdings, thus dramatically
lowering the so-called premium.
ONVI was a good start, but needs
to continue its momentum and add
value to holdings. BWAY looks
very well poised to break out soon.
All of this will serve somewhat as a
buffer to the ongoing shares
coming onto the mkt from lockout
end. All in all, still a tug of war
which way it'll go, and depends
largely on a home run every at bat
with IPOs.
Incubator companies are virtual squared.
When the market for Internet stocks is
strong, the incubators seem to get even
stronger. Internet Capital Group had their
ducks in a row. Eric Ziegler wrote on
March 3...
Huge increase in short interest!
Interpret it anyway you want.
>From December to February, short
interest had tripled from 4.2 million to 12.7
million shares. Robert Beatty wrote on
March 6...
Robertson Stevens upgrades to
strong buy! $250 price target! The
shorts are gonna get creamed
today! ICGE is already up to $140!
Larry Zenith added...
Surprisingly, Robbie Stephens
came to rescue before Merrill. I'd
bet they could get some potential
lucrative IPOs down the road.
It sure was a quick turnaround for the
stock. Internet Capital Corp. now has a
market cap of $37.5 billion, even higher
than CMGI?s $33.6 billion. That value is six
times still learning?s calculated net asset
value for ICGE?s share of publicly held
companies.
It?s easy to see the attraction of the
incubator business. Now all kinds of
companies are launching venture funds.
But is Jackpot Enterprises really qualified
to evaluate cyber startups and invest
properly?
Well, Jackpot probably saw the move as
diversification into a similar business.
Currently the company operates the
machines where casino patrons put their
money. Soon Jackpot Enterprises will be
offering IPOs where investors in Internet
companies put their money.
Similar business model.
Discussion
Threads
CMGI What
is the latest
news on this
stock?
Internet
Capital
Group LLC -
( Nasdaq-
ICGE )
SI
Members
Featured
CookiePuss
Paulh
stock_bull69
country bob
disu
Sowbug
ZenWarrior
John
Carragher
Larry S.
Dalin
happy_girl
Frank Ellis
Morris
DiB
Scarecrow
DAX KIMPO
DlphcOracl
Larry Zenith
Mohan
Marette
Leeza
Rodriguez
still learning
Eric Ziegler
Robert
Beatty
Are there some new developments on your thread? Radical
personalities? Hot New technologies? Takeovers? Scandals?
Please let us know. All stories are welcome.
Dave Zgodzinski |
