Tuesday June 12, 6:30 pm Eastern Time
CMGI lowers outlook, vows to slow cash burn
(UPDATE: adds details on reducing cash burn rate)
By Tim McLaughlin
BOSTON, June 12 (Reuters) - Beleaguered Internet holding company CMGI Inc. (NasdaqNM:CMGI - news) said on
Tuesday its fiscal third-quarter net loss more than doubled to nearly $1 billion, as the company vowed to slash its cash burn
rate to keep its stable of Web firms and investments afloat.
CMGI lowered its revenue outlook for the current quarter, its fiscal fourth
quarter, saying it expects business to remain relatively flat, compared with
its previous estimate of 3 percent to 5 percent growth.
Meanwhile, CMGI chairman David Wetherell assured analysts during a
conference call that the firm has enough cash to sustain its operations for
12 quarters. He said CMGI will end fiscal 2001, which ends July 31, with
$785 million in cash and equivalents, compared with more than $1 billion
a year ago.
CMGI reduced its cash burn rate by 31 percent in the third quarter, to
about $165 million. That trend should continue in the fourth quarter, with
CMGI operations burning through $140 million to $150 million.
Wetherell also vowed to significantly reduce CMGI's recurring operating losses in fiscal 2002 to as low as $120 million. CMGI
expects to generate that much alone in operating losses in the current quarter.
Andover, Massachusetts-based CMGI said it posted a third-quarter net loss of $963.3 million, or $2.80 a share, compared
with a year-earlier net loss of $428 million, or $1.53 a share.
CMGI racked up an operating loss of nearly $996 million as it wrote down the value of its 2000 investment in Web firms
Tallan, AdForce, and Activate. AdForce has exhausted its resources and is winding down operations. CMGI also is looking to
sell its majority-owned NaviPath business, Wetherell said.
CMGI, whose operations include search engine AltaVista and online marketer Engage Inc. (NasdaqNM:ENGA - news), said
third-quarter revenue was $301 million, up from $233.1 million in the year-ago quarter.
CMGI ranks among the hardest hit Internet stocks. During the past year, a massive selloff of CMGI stock has erased about
$16 billion in shareholder value.
Internet investments, which made CMGI a Wall Street darling in early 2000, slowed to a trickle during the third quarter of the
year. CMGI's portion of @Ventures investments were $2.9 million.
CMGI said it expects fourth-quarter revenue of $280 million to $290 million after saying in March its revenue could top $300
million.
First-quarter revenue in fiscal 2002 is expected to grow modestly to $300 million to $310 million, Wetherell said. By the end of
fiscal 2002, CMGI estimates it will still hold $325 million in cash, assuming no further divestitures.
Before its earnings release, CMGI shares closed up 9 cents to $4.14 on Tuesday on Nasdaq. The stock is off about 93
percent during the past year.
Gruß Dr. Broemme