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To: Teflon who wrote (8)	9/2/1999 11:12:00 PM
From: gdichaz	Read Replies (2) \| Respond to of 1817

Talk : Misc (Tech) : Safeguard Scientifics SFE To: Diana R. Chambers (3407 ) From: BrooklynDave Wednesday, Sep 1 1999 12:02AM ET Reply # of 3418 Here's the story from fortune.com pathfinder.com INTERNET INCUBATORS (OR CMGI VS. SAFEGUARD).... All right, so everyone's always talking about CMGI. CMGI this. CMGI that. Well what about Safeguard? They're an incubator too, and they've been doing it for a couple of DECADES!!!!! Pete Musser founded this company back in 1953. Controlled Novell when it was making PCs, brought in Ray Noorda and discovered it had this cool networking product. Focused on IT since the early 1980s, when he started nurturing companies and essentially spinning them off in rights offerings. And they've had some winners: Cambridge Tech. Sanchez Computer. And just this month Internet Capital Group (ICG). It came at $12 and it now trades for $58. All told it has 11 public companies (that it has retained a stake in) and about 30 privates. So here's the deal. A source close to Safeguard says the value of public holdings is about $59 a share. SFE trades for $63. Company has a market cap of about $2.5 billion. So you're getting all of its private companies for $4!! I'll take that. CMGI, on the other hand, has a market cap of about $10 billion. It sells for about $80 a share. Say the value of its public holdings on a per-share basis is about $23. So why is Safeguard so cheap relative to CMGI?? Couple reasons. First, CMGI has some mega-private companies. Like Alta Vista. And CMGI does a lot of business-to-consumer companies. Sexy. Safeguard does business to business. Unsexy. Also Safeguard is based in Wayne, PA. CMGI is based in Boston. Say no more. Plus, David Wetherell is also a media savvy guy. So I don't know if CMGI is overvalued. But I do know you're getting all of Safeguard's private companies for a few bucks a share. Interestingly about 50% of Safeguard's per-share value comes from ICG. And what is ICG? Why another Internet incubator, of course. Steven Frankel, of Adams Harkness Hill in Boston, knows all this stuff. Real well