My belief is that this stock is highly manipulated. I do not have major short interest in this stock (I only short some LCOS to hedge long position of CMGI). I believe LCOS is going to be a lot volatile short term.
To answer your question, CMGI , a very smart venture investment/direct marketing company is parent company of LCOS. CMGI on the other hand is very undervalued. CMGI owns 60% of LCOS stocks ( the remaining 40% was sold to by CMGI to public), however, 60% of LCOS cap is larger than CMGI' cap. CMGI also owns Geocities, Black Sun interactive, etc. Don't get me wrong, I think LCOS has bright future long term, however I can not imagine this kind of super-highfly price for LCOS, traders push LCOS price to such unreasonable level, while keep its parent company with such low price. CMGI has a 50milions cash at hand with $6 cash/ share. You bet, large portion of the cash came from LCOS when CMGI sold public LCOS through IPO years ago. It is either CMGI go up or LCOS go down to turn insane price to normal. Another insane thing is that LCOS has 25% larger cap than excite while excite has larger market share than lycos (I got this from other post, not comfirmed myself).
As far as LCOS cash position decreasing, I do not mean that LCOS will have trouble to finance it. LCOS still has plenty of cash itself, in addition, CMGI has huge free cash to support LCOS if necessary. What I mean is that LCOS is burning cash substantially, so that such high price of stock is not really sustainable without a quick turn to profitability.
Fundamentally, a company has to either by earning/per share or favorable cash flow to drive the price much higher. I also like Yahoo or alta vista service a lot more than LCOS. Lycos need to improve their search engine more.
I am glad to share and hear some thoughts with you guys.
Henry |
