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Technology Stocks : Internet Capital Group Inc. (ICGE) -- Ignore unavailable to you. Want to Upgrade?

To: Keith J who wrote (574)	9/17/1999 8:14:00 PM
From: RDR	Read Replies (1) \| Respond to of 4187

Check the following interesting !!!!!! ICGE vs. CMGI: Making sense of the value gap Shortly after going public a few weeks ago, Internet Capital Group (ICGE) surpassed CMGI (CMGI) in market value. On Sept. 16, ICGE was $9.3 billion market cap vs. CMGI's $7.8 billion. Justified? Observers tossed up the usual buzzwords and said ICG was more business-to-business. Let's unscramble the alphabet venture soup here and see if there's anything other than a noodle tease at play here. Company CMGI Internet Capital Ticker CMGI ICGE Mkt cap $ 7,786 $ 9,295 TTM sales $ 148 $ 6 TTM earnings $ 56 $ 32 Ratios Mkt cap/sales 53 1,583 Mkt cap/earnings 140 289 Estimated company/all assets value* $ 11,250 $ 8,750 Number of wholly-owned or portfolio companies 45 35 Harmon's estimated value gap between PMV and public 250 250 69% 106% (Note: pmv=private market value or what each firm's assets could be worth fairly valued; $ in millions) While business-to-business is hot and should command a premium as a sector, that doesn't mean that underlying valuation and potential can be ignored, or that ICG wins by marketing. We can pick apart each of the firms' portfolios. But rather than play "dot-com what ifs," we can use a statistic approach combined with historical investment acumen to determine a broader-based view of CMGI vs. ICGE. On a generic $250 million per unit, the value adds up quickly for both firms. It's not just a factor of the number of investments, however. What each firm has done in the past four years also matters. My analysis indicates that taking CMGI's operating and investments all together could be valued at my estimated $11.25 billion. There's plenty of B-2-B in there and B-2-C (consumer) also. The key difference is platform and track record. CMGI has pulled off stadium-cheering moments with Lycos (LCOS) and GeoCities (now part of Yahoo). It still owns 18 percent of LCOS. Now consider also AltaVista, one of the top sites and services in the world for Web users, which CMGI just acquired from Compaq. It ranks in the top 10-12 any given month, according to Media Metrix. CMGI owns about 80 percent of Engage (ENGA), with a market cap of $1.6 billion. Between AltaVista and Engage, I find $3.6 billion of value. That's half what CMGI trades for and we haven't discussed its 40 more investments. Focusing on ICG, using a generic value per each of its 35 investments, I come up with $8.75 billion valuation for ICGE. Which means that Sept. 16's market cap was a 6 percent premium to what I think ICGE could or "ought" to be valued at. Again, this median public/private market valuation factors some stars and duds in its portfolio. Both firms are portfolio-driven with quarterly results that make predictions meaningless on the revenue side. Whatever the market mood for IPOs, acquisitions and mergers has more direct bearing on CMGI and ICGE, with greater influence on the latter one. ICGE announced Sept. 16 a loss of $11 million for the quarter ended June 30. Unpredictable. For example, for second quarter 1998, ICGE posted $6.7 million net income when it realized gains on investing in VerticalNet (VERT). VERT's the only thing ICG has to its credit so far, and I've always believed that the promise of VerticalNet and the delivered results have been two different things. VERT is a home run and feather in ICG's cap but not a grand slam in the industry. In other words, VerticalNet is not yet a hit in its sector as measured by revenue and users. VERT's market cap Sept. 16 hit $1.1 billion. ICGE owns a small piece. Even if it owned it 100 percent, that's still not big enough of a blip. GeoCities, in contrast, was a grand slam and Lycos was a paltry million dollars parlayed into several billion by CMGI. And each one has millions of users. Engage is a more recent example of value created. More than buzzwords or following the herd, the numbers tell the story so far. Both have potential, but soup to nuts it's time for the value gaps of alphabet soups CMGI and ICGE to get unscrambled.

To: Keith J who wrote (574)	9/18/1999 12:07:00 AM
From: TIG	Respond to of 4187

Keith, you are asking the wrong person:-). I am a major long on this one, so I don't know how to answer your question. I am also a CMGI holder of 550 shares, so either way, I am covered. As I said before, I really know little about the whole thing of ICGE vs CMGI, but I think partially it's because ICGE is now considered pure B2B incubator, and hence the perceived value. I like them both, so I am in the long haul. But be careful with shorting hot stocks like ICGE, RHAT, RBAK, BRCD etc, people can lose real money in short squeeze. Although I think ICGE with 10M float, the risk is lower. Eventually the market can work its way to fair value the stock, but I do not see that happen anytime soon, except if we are to be in a real bear market(hardly now). So if you want, short it to your heart's delight. Good luck Keith.