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Technology Stocks : CMGI What is the latest news on this stock? -- Ignore unavailable to you. Want to Upgrade?

To: Jenne who wrote (10809)	6/24/1999 10:05:00 AM
From: Mark Peterson CPA	Read Replies (2) \| Respond to of 19700

Additional news: CMGI's Talks On Acquiring Web Portal Lycos Stall After CEOs Clash By Jon G. Auerbach, Staff Reporter of The Wall Street Journal CMGI Inc. has held talks with Lycos Inc. about a possible acquisition of the Web portal, but discussions have recently stalled amid ill feelings between the chief executive officers of the two concerns. CMGI, an Internet-investing firm that is trying to beef up its operating assets, approached Lycos several weeks ago, after CMGI torpedoed a merger agreement between Lycos and USA Networks Inc. CMGI is also in talks with Compaq Computer Corp. to purchase the AltaVista search engine and other Internet properties for about $2.5 billion. The CMGI overture to Lycos represents another turn in the complicated relations between the two companies. CMGI helped found Lycos and still owns 18% of the company, which is the No. 2 portal on the Internet in terms of audience. It couldn't be determined how far the merger talks proceeded, but people familiar with the matter said they foundered partly on the unwillingness of Lycos's CEO, Robert J. Davis, to work for his CMGI counterpart, David S. Wetherell. Relations between the two men previously broke down in February after Mr. Wetherell, then a Lycos board member, retracted his support for the USA Networks deal and then quit the board to fight it. The collapse hurt the reputation of Mr. Davis, who had aggressively sought shareholder approval for the deal. People familiar with Lycos's thinking said the company hasn't completely foreclosed a sale to CMGI. But Lycos has been pressing for a deal that would value its shares above $127, the price at which they were trading before the USA Networks deal was announced, said one person familiar with the matter. That would value Lycos at about $6 billion. Lycos shares closed yesterday at $93.50, up $4.4375, or 5%, in Nasdaq Stock Market trading. CMGI shares rose $4 to $98.9375 on Nasdaq. Lycos also has concerns that CMGI's share price may be overvalued. CMGI commands a stock-market valuation of roughly $9.4 billion, though the company had a loss of $27.8 million in the most recent quarter on revenue of $43.7 million. Still, CMGI remains interested in acquiring Lycos as a way to build itself into an Internet media powerhouse, said several people close to the matter. A common strand between the CMGI interest in Lycos and the Compaq assets, said people close to the matter, is CMGI's need to bolster its operating assets to avoid possibly onerous regulation as an investment company, or mutual fund, under federal securities laws. Under the Investment Company Act of 1940, companies that own investment securities with a value exceeding 40% of total assets, excluding cash items and government securities, are generally considered mutual funds. CMGI has often been above that threshold and said in a Securities and Exchange Commission filing earlier this year that it has until the end of October to bring its investments below the 40% mark or face possible SEC action. As an investment company, CMGI would have to distribute gains to shareholders each year from selling its investments. Those gains would be taxable to those shareholders and give them a disincentive to own CMGI. That is only one of many problems CMGI would have, as mutual funds face more restrictive equity ownership rules as well. As of April 30, CMGI had investment securities of $886.2 million and total assets of $1.25 billion, according to its SEC filings. Buying the Compaq assets, which also include Shopping.com and Zip2.com, would more than double the company's assets, freeing it from the possible regulatory threat. Compaq's board is expected to vote on the CMGI acquisition proposal today, according to a Compaq insider. Copyright (c) 1999 Dow Jones & Company, Inc. All Rights Reserved.