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Technology Stocks : CMGI What is the latest news on this stock?
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To: Michael Berkel who wrote (5250)3/7/1999 3:42:00 PM
From: B. A. Marlow  Read Replies (2) of 19700
 
Wanna "value" CMGI? Let's use Steve Harmon's model.

As a former communications/cable/media analyst, he uses a very effective approach at Internet stock valuation (especially, for the portals, but the same concept can be applied to other sites).

For those unfamiliar with it, Harmon creates relative valuations based on *market capitalization per user*. As cable TV firms, cellular operators and paging services tend to change hands on the basis of a "per-user" value, Harmon's approach tends to be relevant to Internet stock valuation, especially where "conventional wisdom" doesn't have a clue. For example, ATHM's purchase (for stock) of XCIT worked out to about $400 per user. (When the dust settles, who knows where we'll come out with the USAI/TMCS/LCOS deal?)

Working backwards, we could establish a range of values for the users of various CMGI properties and multiply by an estimate of the number of unique users for each. If we applied the respective CMGI ownership percentages and added up the list, it would suggest an aggregate valuation for most of CMGI. With Harmon's approach, the elusive "premium" is built right in. I believe we're gonna be quite stunned by the result.

Here's a link to Harmon's model. Anyone feel like oiling up a spreadsheet?

BAM

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