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

To: charger who wrote (1092)	8/5/1998 10:27:00 AM
From: Urlman	Respond to of 19700

INDIVIDUAL INVESTOR/Analyst: Alex Yakirevich Update 8/4 Updated 8/4/98 with CMGI at $66.63. CMG INFORMATION SERVICES INC invests in and integrates Internet, interactive media and database technologies. We're Upgrading CMGI to Buy; Buy (8/4) CMG Information Services (NASDAQ: CMGI) shares rose 4%, to $66.63, following the announcement of the sale of PlanetAll, one of CMGI's holdings. CMGI traded as high as $68.00 in today's trading on a day when the broader market got crushed. CMGI's CMG@Venture II subsidiary sold its 25% stake in PlanetAll to Amazon.com (NASDAQ: AMZN). PlanetAll is a provider of contact management services, such as an address directory and a reminder service on the Web. CMG@Venture II will receive 225,000 shares of Amazon.com restricted shares ("restricted" means that CMGI will be able to start selling these shares in the beginning of November). Based on Amazon.com's current share price of $110, the deal represents a 400% return on CMG@Ventures II's total $5 million investment in PlanetAll. This announcement follows the sale of CMGI's 34% investment interest in Reel.com, a Web-based video store, to Hollywood Entertainment (NASDAQ: HLYW). Following the transaction, CMGI will own 5 million shares of Hollywood Entertainment at an average price of $13.75 per share, or a $69 million total position. CMGI's original investment in Reel.com was only $6.9 million, which means that the company realized a 900% return on the investment. Successful Strategy These transactions reveal how CMGI's stock has been driven to current valuation levels. CMGI invests in leading Internet players and is able to realize incredible returns on its investments through spinoffs and stock swaps. CMGI's biggest winner to date is the 8,900% return on its original investment in Lycos (NASDAQ: LCOS). Assuming that CMGI can earn 30 times on its private investments, the potential value of its holdings, excluding taxes and the value of Lycos, GeoCities, Engage/Accipiter, Reel.com, SalesLink, and PlanetAll, is $690 million. Add the value of the companies that have been excluded plus CMGI's cash balance of $49 million, and CMGI's total valuation is about $1.6 billion, or $70 per share. Note, that our model values GeoCities at its expected IPO price of only $13. Considering the success of some recent IPOs, such as that of Broadcast.com, however, there is substantial upside to this price. The new valuation of CMGI does not mean that our old model was incorrect. The old model valued CMGI's holdings as private companies. However, with the latest announcements, CMGI has earned a track record of unloading its private holdings at substantial premiums. This ability warrants a substantial upward adjustment in price of CMGI. Upgrading CMGI to Buy We upgrade our recommendation of CMGI to Buy, from Sell, based on its ability to establish terrific returns on investment on its venture capital investments. Analyst: Alex Yakirevich Updated 8/4/98 with CMGI at $66.63. Recommended 11/18/97 at $10.88 CMGI Analysis Archive