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CMGI trounces estimates
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September 27, 1999: 6:40 p.m. ET
Internet investment firm reports 4Q earnings of $4.24 a share
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NEW YORK (CNNfn) - Internet investment firm CMGI Inc. recorded fourth-quarter earnings well ahead of Wall Street estimates Monday as revenue from the company's Internet businesses jumped 351 percent.
The Andover, Mass.-based firm posted a profit of $452.7 million, or $4.24 a diluted share. Analysts polled by First Call expected CMGI (CMGI) to log a profit of $4.08 a share. Revenue climbed to $53.6 million.
The company announced its results after the close of trading.
Including $744.7 million in gains, largely from Yahoo! Inc. 's (YHOO) acquisition of GeoCities, CMGI earned $4.74 a share.
CMGI easily outstripped its year-ago performance, when it reported a profit of $27.1 million, or 28 cents a share, on $25.9 million in revenue.
CMGI shares rose 8-5/16 to close at 93-1/8 prior to the announcement. Its shares slipped to 92-1/2 in after-hours trade.
CMGI's business model centers on building Web properties to take them public. So far it has created or acquired nearly 50 subsidiaries, including its recently completed acquisition of Internet portal AltaVista.
The company said it generated $18.8 million in fourth-quarter revenue from its Internet businesses. CMGI's profits far exceed its revenue figures because it drives its earnings primarily through investment gains in Internet stocks.
"We are very proud of the significant progress made across our portfolio of businesses during this quarter and past year," said David Wetherell, CMGI chief executive officer.
Wetherell said in a conference call that CMGI expects its fiscal year 2000 earnings to top $750 million.
For the 1999 fiscal year, CMGI reported a profit of $476.2 million, or $4.60 a diluted share, on $175.7 million in revenue, compared with 1998 earnings of $31.9 million, or 36 cents a share, on $81.9 million in revenue. CMGI's net profits dwarfed its revenues, since a large part of the company's earnings are the result of investment gains in high-flying Internet stocks
More acquisitions
Separately, CMGI agreed to acquire closely held free Internet access provider 1stUp.com in a $60 million all-stock transaction.
The move further bolsters CMGI's presence in the burgeoning free Internet access market, which is seen as a threat to such pay services as America Online Inc. (AOL). Last month, AltaVista began offering a free Internet service, which is subsidized by advertising. AltaVista provides its FreeAccess service through 1stUp.com.
"The single most important trend affecting ISPs over the coming years will be free Internet access, and no company is better positioned to benefit from that than CMGI," Wetherell said.
Earlier Monday, CMGI agreed to acquire Signatures Network, formerly Sony Signatures, a music and celebrity licensing firm. CMGI didn't disclose financial terms.
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CMGI
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