This is from Briefing.com.
CMG INFORMATION SERVICES(CMGI) 55 1/2 -3 "The Internet's been beery beery good to me." Forget the fact that this company's core business operating revenue shows
very modest growth, and loses $2 for every $3 in revenue. This company makes incredible money by selling stock in companies it helped fund and bring to market. Originally formed as
a direct marketing company, CMGI was one of the earliest companies to see the potential in the Internet, and formed a venture arm in February 1995 (one month after Briefing.com
started). As marketers, they saw the advertising value of the net and invested heavily in numerous start-ups, including Lycos (LCOS), GeoCities ( GCTY), PlanetDirect, Silknet,
Reel.com, and many more. The ownership positions have given the company, whose actual revenues from the core fulfillment servies business are only $80 million annually, their $1
billion market capitalization. Many investors don't even realize that CMGI actually has a day-to-day marketing business. Most view CMGI as a kind of Internet mutual fund, which will
reap the reward when they sell stock in the companies they funded. That's where the tremendous earnings highlighted in today's press release comes from. The company lost $20.9
million or $(0.85) per share, fully diluted, on the core business. But who cares? They made $74.5 million, or $3.02 per share in capital gains on stock in Lycos, Premiere Technologies,
TeleT Communications, and NetCarta. After taxes and interest expense the total is $1.27 per share earnings, fully diluted. (CMGI's press release highlights $1.38 per share, but that is
basic earnings, undiluted.) CMGI still owns significant portions of the companies they sold stock in, and they have large positions in many still private companies. Presumably, if the
internet market holds up like this, they can function as quasi-venture capital firm for a long time. Here is a brief list of the 27 different companies they hold through three different arms,
not counting the 225,000 shares of Amazon (AMZN) they received when they sold PlanetAll on August 4.
CMGI Division
Role
Companies
@Ventures
Venture investments, partial or
minority positions
blaxxun interactive, Critical Path, Chemdex Corp.,GeoCities, Koz , Lycos, Mother
Nature.com, Parable, PlanetAll, Reel.com, Silknet, Softway Systems, Speech
Machines, TicketsLive Corp., Vicinity,Visto
CMG Internet Group
Wholly owned or majority
interests
ADSmart, Engage Technologies, InfoMation, Magnitude Network, NaviSite,
Planet Direct, The Password
CMG Direct
Marketing
Direct Marketing Services
CMG Direct, InSolutions, Inc. On-Demand, Solutions, Inc., SalesLink
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