Here is an interesting article on CMGI:
The CMGi Conundrum: Damn the Deal or Damn Themselves?
In the absence of USA's Barry Diller demanding a duel with CMGi's
David Wetherell over the proposed USA-Lycos merger, the press was left
pondering just how this mess would resolve itself. For those joining
"Showdown at the Media Mogul Corral" late in the miniseries, Diller's
USA Networks proposed merging online with Lycos, whose largest
shareholder is CMGi, an investment firm run by Wetherell. Investors
held their nose at the complex deal, which gave USA a 61 percent stake
in the combined companies, and pummeled Lycos' stock. Wetherell voted
for the deal, but later complained when the stock dropped. Diller
publicly said he would not renegotiate terms, so Wetherell quit the
Lycos board to pursue alternative suitors.
For those wondering why Wetherell is putting up such a fuss, MSNBC's
Christopher Byron supplied answers. Byron reported that CMGi's chief
is worried that accepting the Lycos offer would hurt the stratospheric
value of his own company - which has soared from $60 last Christmas to
the $190s recently. The idea that CMGi would buy Lycos itself doesn't
make sense, according to Byron, and would be done "apparently for no
other reason than to prop up CMGi's price, since there are no obvious
synergies whatsoever to be realized." Not surprisingly, Byron isn't
enamored of CMGi's business, which includes a barely profitable
direct-marketing arm and an investment business banking on coming IPOs
and mergers. With clouds over the Yahoo-GeoCities deal (due to
accounting crackdowns) on top of the Lycos mayhem, CMGi loses its
biggest paydays, according to Byron. His gloomy conclusion? "This is
definitely an unstable situation, and its outcome could wind up
directly affecting the stock prices of not just Lycos and CMGi but the
whole Internet sector."
Meanwhile, George Mannes of TheStreet.com has developed a new motto
for the coin of the Internet realm: "In Wetherell We Trust." Well, not
quite, but Mannes said Wetherell's stance is pretty much supported by
Lycos shareholders. The Boston Globe's Ross Kerber followed up with
quotes from CMGi and Lycos. CMGi's marketing manager told Kerber that
an alternative deal could be announced within days. Lycos stock shot
up 14 percent to 110 on the news of Wetherell dropping off the board,
prompting analysts to speculate that he was "jawboning" to goose the
stock. Kerber's Lycos sources said that they thought the USA deal was
the best possible combo, and doubted a better offer would come along.
Meanwhile, Lycos CEO Bob Davis stood by the USA deal, announcing a
three-year, $52 million marketing agreement with WebMD, which Davis
pegged to the merger with USA.
If things were getting a little turbulent in the Massachusetts corner
of Net Stock Land, the Good Witch of the Street - analyst Henry
Blodget - was happy to sprinkle a little fairy dust. Blodget, who
recently moved from CIBC Oppenheimer to Merrill Lynch, yesterday came
out with "buy" ratings on AOL, Yahoo and, yes, Amazon.com. The
predictable result? They all soared. CBS MarketWatch's Bambi Francisco
helped propogate the Blodget mystique, quoting another analyst as
saying Blodget's report was "huge," since Merrill had been bearish on
Net stocks and would now be driving more buyers to the sector. The
plum Blodget-ism? "[The Net is a] global megatrend, along the lines of
the printing press, the telephone and the computer," he gushed. Still,
Blodget did mention the eensy-teensy possibility of a bubble bursting
"and a lot of wreckage." |
