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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Syed who wrote (35330)	5/7/1999 11:54:00 PM
From: AD	Respond to of 122087

CMGI revalues in-process R&D charges Changes widen future losses, not prospects By Bambi Francisco CBS MarketWatch Last Update: 3:33 PM ET May 7, 1999 Net Stocks Internet Economy NEW YORK (CBS.MW) -- CMGI said it's restating four quarterly earnings reports that will effectively increase its bottom-line losses in th coming quarters, but analysts say the new valuation doesn't change the company's business prospects. The Andover, Mass. company said it's lowering the value of "in-process research and development" charges for its purchase of Accipiter, Inc. and purchases made by Lycos (LCOS: news, msgs). Ken Winston, Internet analyst at Needham & Company said the changes will "not have a material or relevant impact to CMGI's fundamentals." Shares of CMGI (CMGI: news, msgs) were down 5 5/8 to 221 1/2. CMGI said it's making the "voluntary" adjustments in light of the Securities and Exchange Commission's earnings management initiative, which began last fall. The SEC has been concerned that companies were overvaluing "in-process R&D," to make acquisitions appear more accretive. "The SEC is trying to get companies to manage their business not their earnings," said David Zion, accounting analyst at Bear Stearns. By the end of this year, Zion saidcompanies will not be allowed to take the in-process R&D write-off but instead capitalize it as an asset because of proposed changes by the Financial Accounting Standards Board. The move also reflects Lycos' restatement of its acquisitions which would've impacted CMGI's results since CMGI owns some 20 percent of the Net portal. In keeping in line with this new valuation, CMGI said it plans to amortize these acquisition cost over five years. Many companies have restated these charges recently in light of the SEC's crackdown in this area. He points out that over the past few months some 30 companies have had to lower their "in-process R&D" write-offs, resulting in reduced future earnings. CMGI reports its fiscal third quarter results in mid-June. The First Call consensus estimate is a loss of 27 cents vs. a loss of 28 cents.