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CMGI beats estimates
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September 21, 2000: 7:58 p.m. ET
Internet investment company's holdings dwindle in value
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NEW YORK (CNNfn) - Internet investment company CMGI reported on Thursday that its fourth-quarter revenue soared more than six-fold over the same period last year, and posted a quarterly loss that was smaller than analysts had expected.
CMGI (CMGI: Research, Estimates), based in Andover, Mass., reported net revenue of $377.2 million for the fourth quarter ended July 31, a 568 percent increase from last year's fourth quarter. Net revenue for the company's search and portals segment increased 6,208 percent compared with the fourth quarter of fiscal 1999.
Excluding the effects of certain non-cash charges and the amortization of intangible assets, CMGI posted a fourth-quarter net loss of $142.8 million, or 49 cents per share, compared to a profit of $452.7 million, or $4.74 per share, in the same period in 1999. Much of that profit in last year's quarter resulted from a $661 million gain CMGI made by selling its holdings in GeoCities to the Web portal Yahoo!
Analysts had expected CMGI to lose $2.45 per share in the fourth quarter, according to earnings estimate tracker First Call.
Securities analysts value CMGI based on the value of its investment portfolio, rather than by its earnings. CMGI's reported earnings are heavily influenced by gains or losses on securities it decides to sell each quarter, as opposed to the underlying operations of the 70 Internet companies in which it has invested.
 Steep declines in Web stock prices during the past several months have crushed the value of CMGI's securities portfolio. At the end of the fourth quarter, CMGI held $5 billion in publicly traded securities and $654 million in cash. By contrast, it held $17.3 billion of publicly traded securities and $888 million in cash as of Jan. 31 Thus, the value of its cash and publicly traded securities has plunged by 69 percent over the last two quarters.
CMGI's stock has plunged alongside the value of its Web company investments. At its closing price of $36.44, CMGI's stock is down 78 percent from its 52-week high of $163.50, lowering its total market cap to $10.75 billion.
CMGI owns 17 companies, two of which are public and 15 of which are private. Its most valuable private company is the Web portal AltaVista, in which it has an 80 percent stake. CMGI said on a conference call Thursday that it hopes to take AltaVista public between January and March of 2001, depending on market conditions. AltaVista first filed a registration statement at the SEC to become public in December 1999.
Layoffs at CMGI-related companies
CMGI's earnings report comes as the company is laying off employees at its operating units to try to move them closer to profitability.
The online marketing firm Engage Inc. (ENGA: Research, Estimates), which is majority-owned by CMGI, said Wednesday that it plans to cut about 13 percent of its work force, or 175 jobs, and record a charge to consolidate its business units. Engage's stock is a whopping 91 percent below its 52-week high of $94.50
Likewise, AltaVista said on Sept. 15 that it had laid off 225 people, or 25 percent of its work force, as part of a series of steps to achieve profitability.
The Web portal, which lags well behind industry leader Yahoo! in advertising revenue, said that its North American operation intends to be profitable, excluding amortization expenses, in the quarter ending Jan. 31, 2001. 
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