The Internet Speculator (CMGI) - Part I
bradgoldstein (26/M/Goldstein) Aug 4
CMG experienced yet another volatile ride in July. CMG rallied to
highs over $90 per share, but finished the month at $68 1/8. July was an extremely exciting period of growth for CMG. CMG has been reducing its exposure to Lycos and using the additional cash to invest in various Internet companies. While CMG has only invested in privately held Internet companies in the past, they have recently purchased stakes in publicly traded companies as well, establishing a new investment strategy for CMG.
On July 7, CMG acquired On-Demand Solutions for approximately $7 million. On-Demand is a leading supplier of e-commerce fulfillment solutions for both business-business and business-consumer markets. On-Demand will become a wholly owned subsidiary of CMG and will be integrated into SalesLink.
Ten days later, CMG invested $500,000 in Magnitude Network for a 19.9% stake. CMG has the option to buy the remaining 81.1% if certain performance requirements are met by March 31, 1999. Magnitude enables CMG to add Internet- broadcast integration capability to its growing network of Internet companies. Magnitude will augment CMG's Internet Group, a group of related companies which employs a strategy of creating valuable synergies between its affiliates. Specifically, Magnitude complements CMG affiliates such as Planet Direct by providing popular localized content. Magnitude will also work with several other CMG Internet Group companies as they bring traditional radio stations online.
On July 24, CMG participated in a $9 million third round of venture capital funding for Visto Corporation. Visto's Briefcase service provides universal access and Web-based applications, including e-mail, calendar, address book, and files automatically linked to the user's desktop PC. This service enables those traveling on business to access information from their personal PC from a remote Internet connection. Visto has various strategic partners, including Compaq and Microsoft.
The Internet Speculator (CMGI) - Part II bradgoldstein (26/M/Goldstein) Aug 4 1998 5:25PM EDT
On July 30, CMG's 100% owned Engage Technologies announced a multi-million dollar joint venture with Sumitomo Corporation to create Engage-Japan. Details are not yet available, but this deal and ones like it are certain to surface since Microsoft, Intel, and Sumitomo all have stakes in CMG. CMG has a solid base of strategic partners as well as existing synergies among its basket of investments. On July 30, Reel.com (39% owned by CMG) was sold to Hollywood Entertainment for $100 million. CMG is converting its existing investment in Reel.com into shares of Hollywood Entertainment (Nasdaq: HLYW). This makes CMG the largest shareholder in Hollywood Entertainment, which operates the second largest video rental chain in the United States. This is a great deal for all parties involved, especially CMG, profiting from yet another successful investment. As if all this is not enough, CMG closed out the month by purchasing 1.3 million shares of Open Market (Nasdaq: OMKT) for $14 15/16 per share in a $20 million private placement. This investment marks CMG's first stake in a publicly traded company. Open Market provides software that allows businesses to manage a Web site's content as well as conduct e-commerce. Open Market has not experienced much revenue growth over the past year, but they have established some new blue-chip customers in addition to a significant partnership with Intel. CMG continues to make strategic acquisitions as past investments are beginning to pay off. The excitement is just beginning, and GeoCities (Nasdaq: GCTY) is slated to IPO on August 11. GeoCities is rapidly growing and currently ranks as the Internet's third most visited Web site. GCTY is expected to IPO for $12 - $14 per share, giving it a market cap near $490 million. The Internet Speculator anticipates that GCTY will open for approximately $40 per share and may prove to be the hottest IPO in U.S. history, surpassing the recent record set by Internet IPO Broadcast.com (Nasdaq: BCST). CMG continues to do everything right and people are taking notice. The Reel.com acquisition and GeoCities' upcoming IPO should continue to provide CMG with positive press. Short term performance of CMG and the entire Internet sector may hinge on overall market conditions, but the long term growth potential for CMG continues to look overwhelming. CMG provides potential investors with a diversified portfolio of private and publicly traded Internet companies with existing and potential synergies. If The Internet Speculator did not believe in diversification, it would be increasing its Model Portfolio's stake in CMG at this time. For more information, visit www.cmgi.com. Brad Goldstein - The Internet Speculator - (888)5-NETSPEC $195/ year (12 issues) This is a newsletter and does not provide buy/sell recommendations, but information that helps potential investors make more informed investing decisions.
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Thanks to Brad Goldstein on Yahoo Message Board |
