CMGI Revises Financial Guidance Noting Current Market Conditions; Company Projects Existing Cash and Liquidity Sources Adequate for EBITDA Break-Even
ANDOVER, Mass.--(BUSINESS WIRE)--Jan. 18, 2001--CMGI, Inc. (Nasdaq: CMGI), a leading global Internet operating and development company, today revised the financial guidance it had previously provided to the financial community. CMGI continues to execute its segment strategy, first introduced on September 7, 2000. The strategy is designed to focus the company's resources into structures supporting CMGI's operating and development company mission, as well as its drive toward EBITDA (earnings before interest, taxes, depreciation and amortization) break-even within maturing business segments.
Corporate Restructuring Continues
CMGI and certain of its majority-owned operating companies, such as Engage and AltaVista, continue to announce corporate restructuring initiatives, including business unit realignments, divestitures and workforce reductions. Among recent actions, CMGI today announced its decision to discontinue services provided by ExchangePath, and that it is currently exploring strategic alternatives for the business. Collectively, these actions are designed to address opportunities to leverage operating efficiencies and reduce cash burn, both within the respective businesses and for CMGI at large, and are expected to span each of the firm's business segments as the fiscal year progresses.
Commenting on today's announcement, David Wetherell, CMGI Chairman and CEO said, "Without question, the capital markets and the economy at-large are facing new and challenging conditions. Nonetheless, we expect that the scope and role of the Internet as a central medium for communication and commerce will continue to grow globally at an exponential pace."
Wetherell continued, "Although we have seen the Internet's earlier period of rapid growth pause for an inevitable phase of integration and consolidation, we firmly believe that the future opportunities for Infrastructure & Enabling Technologies, Interactive Marketing, Search & Portals, E-Business & Fulfillment, and Internet Professional Services remain robust. " CMGI Revises Financial Guidance Consistent with Industry Slowdown
As with many Internet-centric companies, current market dynamics for several of CMGI's businesses are proving extremely difficult and unpredictable. In light of current conditions and ongoing business reviews, CMGI has announced certain updates to its guidance previously issued on November 13, 2000.
Revenue expectations for each of CMGI's majority-owned companies are currently under review and the company indicated that its previously stated consolidated revenue target of $1.65 billion for the current fiscal year is not likely to be attained. The uncertainty of CMGI's revenue outlook also makes it difficult to accurately forecast consolidated gross margins. As a result, the company indicated that its previously stated consolidated gross profit margin target of 30% for the fourth quarter of the current fiscal year is not likely to be attained.
In addition, profitability targets and timing are under similar review. Owing to the varied and volatile market conditions, the company indicated that it is no longer in a position to project Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) loss for the fourth quarter of the current fiscal year, nor a target timeframe when it will reach EBITDA profitability on a consolidated or segment level basis.
CMGI further indicated that revised guidance will be issued on March 13, 2001 alongside its reporting of the company's Q2 fiscal 2001 earnings results. CMGI also indicated that it continues to evaluate the right investment levels for each of its operating companies. Given the uncertainty of profitability timing, the company has indicated that it is no longer able to project cash burn levels for the remainder of the current fiscal year. While near-term cash demands are likely to fluctuate, the company affirmed its belief that it will exit the fourth fiscal quarter (July, 2001) with a cash and cash equivalent balance of approximately $600 to $700 million.
The company's balances of cash and readily tradable securities on a consolidated basis of $1 billion as of January 17, 2001 are expected to adequately fund CMGI's operations through to EBITDA break-even.
Second Fiscal Quarter Results Previewed
For the second fiscal quarter ending January 31, 2001 CMGI expects revenues to be $335 to $345 million; cost of revenues for the period are expected to be $350 to $360 million, inclusive of one time restructuring charges of $45 to $50 million. Research and development expenses for the period are expected to be $55 to $65 million including one time restructuring charges of $15 to $20 million. Selling and marketing expenses for the period are expected to be $135 to $145 million including one time restructuring charges of $18 to $23 million. General and administrative charges in the period are expected to be $95 to $105 million including one time restructuring charges of $15 to $20 million. Lastly, amortization of intangible assets and stock-based compensation charges of $630 to $640 million are expected to be incurred during the period.
"We have been relentlessly focused on expanding our base of enterprise revenue sources and as a result, have become less dependent on advertising-based revenue streams," said Wetherell. "We continue to be growth-oriented and are repositioning our business units to concentrate on a path to profitability. All of our actions have contemplated these objectives. We will continue to concentrate on these actions, including the possibility of further mergers, divestitures and restructuring of our business units."
About CMGI and CMGI @Ventures
CMGI, Inc. (Nasdaq: CMGI), a leading global Internet operating and development company, represents a network of nearly 70 established and emerging companies, including both CMGI operating businesses and synergistic investments made through its venture capital affiliate, CMGI @Ventures. Companies in the CMGI network span a range of vertical market segments including search and portals; infrastructure and enabling technologies; e-business and fulfillment; interactive marketing; and Internet professional services. CMGI leverages the technologies, content and market reach of its extended network to foster rapid growth and industry leadership across the Internet Economy. Compaq, Microsoft, Pacific Century CyberWorks and Sumitomo hold minority positions in CMGI.
CMGI's majority-owned operating companies include Engage (Nasdaq: ENGA), NaviSite (Nasdaq: NAVI), Activate, AltaVista, CMGion, Equilibrium, ExchangePath, MyWay.com, NaviPath, SalesLink, Signatures Network, Tallan, uBid and yesmail.com. CMGI @Ventures has ownership interests in 50 companies, including Terra Lycos (Nasdaq: TRLY), Critical Path (Nasdaq: CPTH), Ventro (Nasdaq: VNTR) and Vicinity (Nasdaq: VCNT).
CMGI's corporate headquarters is located at 100 Brickstone Square, Andover, MA 01810. CMGI @Ventures has offices there, as well as at 3000 Alpine Road, Menlo Park, CA 94028. For additional information, see cmgi.com and http:// www.ventures.com.
This release contains forward-looking statements which address a variety of subjects including, for example, expected corporate restructuring initiatives, the expected benefits of CMGI's segmentation strategy and reorganization efforts, CMGI's projected financial results for the fiscal second quarter and CMGI's projected profitability and cash position and expected market conditions in the markets in which CMGI and its operating companies compete. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements:
CMGI's success is dependent upon its ability to integrate its operating companies in accordance with its segment strategy; CMGI's success, including its ability to decrease its cash burn rate, improve its cash position and revenue run rate and reach profitability, depends on its ability to execute on its business strategy and the continued and increased demand for and market acceptance of CMGI's and its operating companies' web sites and the Internet in general; CMGI may experience difficulties integrating technologies, operations and personnel of recent acquisitions; and increased competition and technological changes in the markets in which CMGI competes. For a detailed discussion of cautionary statements that may affect CMGI's future results of operations and financial results, please refer to CMGI's filings with the Securities and Exchange Commission, including CMGI's most recent Annual Report on Form 10-K CONTACT: Catherine Taylor CMGI Investor Relations (978) 684-3540 ctaylor@cmgi.com or Deidre Moore CMGI Public Relations (978) 684-3655 dmoore@cmgi.com 17:11 EST JANUARY 18, 2001
(%modification_date PT)
ANDOVER, Mass.--(BUSINESS WIRE)--Jan. 18, 2001--CMGI, Inc. (Nasdaq: CMGI), a leading global Internet operating and development company, today revised the financial guidance it had previously provided to the financial community. CMGI continues to execute its segment strategy, first introduced on September 7, 2000. The strategy is designed to focus the company's resources into structures supporting CMGI's operating and development company mission, as well as its drive toward EBITDA (earnings before interest, taxes, depreciation and amortization) break-even within maturing business segments.
Corporate Restructuring Continues
CMGI and certain of its majority-owned operating companies, such as Engage and AltaVista, continue to announce corporate restructuring initiatives, including business unit realignments, divestitures and workforce reductions. Among recent actions, CMGI today announced its decision to discontinue services provided by ExchangePath, and that it is currently exploring strategic alternatives for the business. Collectively, these actions are designed to address opportunities to leverage operating efficiencies and reduce cash burn, both within the respective businesses and for CMGI at large, and are expected to span each of the firm's business segments as the fiscal year progresses.
Commenting on today's announcement, David Wetherell, CMGI Chairman and CEO said, "Without question, the capital markets and the economy at-large are facing new and challenging conditions. Nonetheless, we expect that the scope and role of the Internet as a central medium for communication and commerce will continue to grow globally at an exponential pace."
Wetherell continued, "Although we have seen the Internet's earlier period of rapid growth pause for an inevitable phase of integration and consolidation, we firmly believe that the future opportunities for Infrastructure & Enabling Technologies, Interactive Marketing, Search & Portals, E-Business & Fulfillment, and Internet Professional Services remain robust. " CMGI Revises Financial Guidance Consistent with Industry Slowdown
As with many Internet-centric companies, current market dynamics for several of CMGI's businesses are proving extremely difficult and unpredictable. In light of current conditions and ongoing business reviews, CMGI has announced certain updates to its guidance previously issued on November 13, 2000.
Revenue expectations for each of CMGI's majority-owned companies are currently under review and the company indicated that its previously stated consolidated revenue target of $1.65 billion for the current fiscal year is not likely to be attained. The uncertainty of CMGI's revenue outlook also makes it difficult to accurately forecast consolidated gross margins. As a result, the company indicated that its previously stated consolidated gross profit margin target of 30% for the fourth quarter of the current fiscal year is not likely to be attained.
In addition, profitability targets and timing are under similar review. Owing to the varied and volatile market conditions, the company indicated that it is no longer in a position to project Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) loss for the fourth quarter of the current fiscal year, nor a target timeframe when it will reach EBITDA profitability on a consolidated or segment level basis.
CMGI further indicated that revised guidance will be issued on March 13, 2001 alongside its reporting of the company's Q2 fiscal 2001 earnings results. CMGI also indicated that it continues to evaluate the right investment levels for each of its operating companies. Given the uncertainty of profitability timing, the company has indicated that it is no longer able to project cash burn levels for the remainder of the current fiscal year. While near-term cash demands are likely to fluctuate, the company affirmed its belief that it will exit the fourth fiscal quarter (July, 2001) with a cash and cash equivalent balance of approximately $600 to $700 million.
The company's balances of cash and readily tradable securities on a consolidated basis of $1 billion as of January 17, 2001 are expected to adequately fund CMGI's operations through to EBITDA break-even.
Second Fiscal Quarter Results Previewed
For the second fiscal quarter ending January 31, 2001 CMGI expects revenues to be $335 to $345 million; cost of revenues for the period are expected to be $350 to $360 million, inclusive of one time restructuring charges of $45 to $50 million. Research and development expenses for the period are expected to be $55 to $65 million including one time restructuring charges of $15 to $20 million. Selling and marketing expenses for the period are expected to be $135 to $145 million including one time restructuring charges of $18 to $23 million. General and administrative charges in the period are expected to be $95 to $105 million including one time restructuring charges of $15 to $20 million. Lastly, amortization of intangible assets and stock-based compensation charges of $630 to $640 million are expected to be incurred during the period.
"We have been relentlessly focused on expanding our base of enterprise revenue sources and as a result, have become less dependent on advertising-based revenue streams," said Wetherell. "We continue to be growth-oriented and are repositioning our business units to concentrate on a path to profitability. All of our actions have contemplated these objectives. We will continue to concentrate on these actions, including the possibility of further mergers, divestitures and restructuring of our business units."
About CMGI and CMGI @Ventures
CMGI, Inc. (Nasdaq: CMGI), a leading global Internet operating and development company, represents a network of nearly 70 established and emerging companies, including both CMGI operating businesses and synergistic investments made through its venture capital affiliate, CMGI @Ventures. Companies in the CMGI network span a range of vertical market segments including search and portals; infrastructure and enabling technologies; e-business and fulfillment; interactive marketing; and Internet professional services. CMGI leverages the technologies, content and market reach of its extended network to foster rapid growth and industry leadership across the Internet Economy. Compaq, Microsoft, Pacific Century CyberWorks and Sumitomo hold minority positions in CMGI.
CMGI's majority-owned operating companies include Engage (Nasdaq: ENGA), NaviSite (Nasdaq: NAVI), Activate, AltaVista, CMGion, Equilibrium, ExchangePath, MyWay.com, NaviPath, SalesLink, Signatures Network, Tallan, uBid and yesmail.com. CMGI @Ventures has ownership interests in 50 companies, including Terra Lycos (Nasdaq: TRLY), Critical Path (Nasdaq: CPTH), Ventro (Nasdaq: VNTR) and Vicinity (Nasdaq: VCNT).
CMGI's corporate headquarters is located at 100 Brickstone Square, Andover, MA 01810. CMGI @Ventures has offices there, as well as at 3000 Alpine Road, Menlo Park, CA 94028. For additional information, see cmgi.com and http:// www.ventures.com.
This release contains forward-looking statements which address a variety of subjects including, for example, expected corporate restructuring initiatives, the expected benefits of CMGI's segmentation strategy and reorganization efforts, CMGI's projected financial results for the fiscal second quarter and CMGI's projected profitability and cash position and expected market conditions in the markets in which CMGI and its operating companies compete. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements:
CMGI's success is dependent upon its ability to integrate its operating companies in accordance with its segment strategy; CMGI's success, including its ability to decrease its cash burn rate, improve its cash position and revenue run rate and reach profitability, depends on its ability to execute on its business strategy and the continued and increased demand for and market acceptance of CMGI's and its operating companies' web sites and the Internet in general; CMGI may experience difficulties integrating technologies, operations and personnel of recent acquisitions; and increased competition and technological changes in the markets in which CMGI competes. For a detailed discussion of cautionary statements that may affect CMGI's future results of operations and financial results, please refer to CMGI's filings with the Securities and Exchange Commission, including CMGI's most recent Annual Report on Form 10-K CONTACT: Catherine Taylor CMGI Investor Relations (978) 684-3540 ctaylor@cmgi.com or Deidre Moore CMGI Public Relations (978) 684-3655 dmoore@cmgi.com 17:11 EST JANUARY 18, 2001
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