Just to ease my mind, I simply view Softbank as my tech mutual fund, to be opened upon retirement in X years and adding funds as they become available...if I worried about my Janus World Wide Fund as much as some here worry about the daily girations of Softbank, I'd be worried sick and ready to bail...if I believed in Mr. Son's visionary plan 2 years ago, no reason to doubt him or his plans now based simply on the value of the stock, and still believe that in 10 years, this pain we are now experiencing will be meaningless...something called "delayed gratification"...on that note, going to Maui end of month to start my mission of selecting a retirement home!...choices: Hawaii, Bermuda or Arizona.
For those of you who like to draw analogies between CMGI and Softbank:
Staying the Course at CMGI
By George Mannes
Senior Writer
8/2/00 11:24 AM ET
Times are tough for Internet venture capitalists. But they're still an @Venture for Jon Callaghan and CMGI (CMGI:Nasdaq - news).
Shares of CMGI, which rode the frenzied Internet IPO wave over the past year -- thanks to its investments in dozens of privately held Net companies, a number of which have come public -- have plunged nearly 80% as investors have grown pessimistic about returns on early-stage Net investing. The stock, which hit an all-time high of 163 1/2, fell nearly 9% Tuesday to close at 34 1/2.
Other publicly traded venture operations that have been victimized by the cold water thrown on the IPO market include Safeguard Scientifics (SFE:NYSE - news) and Internet Capital Group (ICGE:Nasdaq - news), off 70% and 85% from their highs, respectively. Internet incubator divine Interventures (DVIN:Nasdaq - news), which finally went public last month after a pre-IPO process that seemed nearly soap-operatic, is trading just below its offering price.
But Callaghan, newly elevated to become one of the four managing partners of CMGI @Ventures, the venture capital arm of CMGI, says the firm is readjusting its tactics in response to the new state of the IPO market. "We are becoming more selective," Callaghan says. "And we understand it's going to take more capital over time. ... You don't have public markets playing venture capitalist anymore. ... We need to do that privately now."
Off the Peak
CMGI shares slide as investors abandon Net stocks
In addition, just like virtually all of the privately held Internet companies unaffiliated with CMGI, the ones in the CMGI fold are settling in for an indefinite time period when they won't be able to tap the public markets for cheap capital. Companies in the CMGI venture portfolio are trying to slash the rate at which they're burning cash by cutting down on new hires, or in some cases by laying off people, he says.
A Little Surprise
CMGI did and didn't foresee the recent carnage in Net valuations, Callaghan says. Over the past 18 months, the company expected some sort of "consolidation and shakeout" in the Net market. But he didn't figure out the timing, he says. Nor did he foresee the magnitude. "Quite frankly, we're surprised by the severity and velocity with which it happened."
But CMGI's venture affiliate is, of course, still open for business. Domestically, the firm has about $3 billion to invest, including subspecialties such as business-to-business and emerging technologies. (An additional $1.5 billion is slated to go to international investments in conjunction with Hong Kong-traded Pacific Century CyberWorks and the investment firm Hicks Muse Tate & Furst.) As for the now-reviled consumer segment, CMGI is still investing in it, says Callaghan, but he adds, "I think it's going to be harder across the board for the consumer business models."
Like other Net investors, Callaghan sees big potential for growth in wireless, but not overnight. "The installed base is huge," he says, and the expected numbers of people who might use wireless devices to communicate and conduct transactions are "just staggering" -- equivalent to a second Internet. But he suggests that the different generations of standards spreading out through the industry are hampering market growth. "That may mean that mass adoption occurs within the next three years, or maybe the next five years," he says.
In the meantime, CMGI investors are likely waiting for signs of life from the IPO market, which might translate into an IPO for majority-owned AltaVista (which actually isn't part of the @Ventures portfolio). Plus, they're looking for better news coming out of venture investments like retailer Furniture.com, whose recent difficulties have included a Boston Globe article focusing on a spate of consumer complaints directed at the e-commerce site.
"There are situations that will work, and there are some that will be tough times," says Callaghan, declining to comment specifically on Furniture.com. "I think we've shown in a lot of situations our true nature: We're in it for the long haul." |
