Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: BLong who wrote (4800)	2/14/1999 3:47:00 PM
From: Uncle Frank	Respond to of 19700

I'm confused about the cmgi/lycos/usai debacle as well BLong. Thought about it on Thursday night after the great recovery of cmgi value, read the latest statements from cmgi on Thursday night and Friday morning, and closed my cmgi position at a breakeven point. I'll sit on the sidelines until it's absolutely clear that cmgi and lcos will do the right thing for their shareholders. Frank

To: BLong who wrote (4800)	2/15/1999 1:33:00 PM
From: Stuart C Hall	Read Replies (1) \| Respond to of 19700

BLong, Stuart, I guess I'm confused. Even if the price of Lycos bounces back to the $127 range as CMGI board members want, isn't the deal for a fixed number of USA shares? Then why would it make a difference? From one of the Press releases: The merged entity will be 61.5 percent owned by USA Networks, Lycos holders will get one share in the new company for each Lycos share, equal to about a 30 percent stake, and Ticketmaster holders will get 0.45 shares in the new company for each share held, amounting to a 8.45 percent ownership, according to Hatch. In the CIBC research note downgrading Lycos, analyst Henry Blodgett stated, ''Although we like the USA/Lycos story ... and we have great respect for the vision, talent and resources of the various parties involved, we cannot justify an 'Internet' revenue multiple for the stock.'' _____ LCOS will own 30% of the new venture. Calculating CMGI's 20% of LCOS yields CMGI 6%. Mixing the valuations of the different companies (USA, TMCS and LCOS) reduces the market valuation of the LCOS position since it is no longer a pure Internet play but part of a larger media conglomerate. CMGI has just gone from owning 20% of a highly valued Internet stock to owning 6% of a more traditionally valued media company with a leading Internet presence. Will CMGI hold this position now that is it not a pure Internet play? Will they block the merger in hopes of LCOS returning to former valuations so they can negotiate a more profitable deal? I think CMGI's thoughts were that the Home Shopping Network infrastructure and customer base was going to open the floodgates for LCOS E-Commerce. Maybe CMGI is just ahead of the market thinking on this fact. I'm very happy that CMGI is pushing back on this deal. However, I'm sorry to see that we are hurt in the short term. To answer your question BLong, CMGI's stake in LCOS is hurt by the more traditional valuation models used by CIBC for the new combined entity. In the interest of us, the CMGI stockholders, CMGI is fighting to retain LCOS' previous valuation at all costs. If the deal is for a fixed number of shares in the new company it is important to CMGI that those shares carry the valuation that is closest to their core business, Internet, rather than to the majority owner, USA. I hope that made sense. Regards, Stuart