Internet investment firm CMGI posts $1.28B net loss

Troubled past investments by Internet investing firm CMGI Inc. have helped deepen the company's financial woes, according to quarterly financial results released yesterday.

CMGI reported a net loss of $1.28 billion for the fourth fiscal quarter, ended July 31, including write-downs taken for investments in several businesses, compared with a net loss of $633 million for the same period a year ago.

Excluding charges, the company reported an operating loss of $104.5 million for the quarter, compared with a loss of $189 million one year ago.

Net revenue was listed at $255.5 million for the fourth quarter, compared with $370 million one year ago. Annual net revenue for fiscal 2001 increased to $1.24 billion, up $347.3 million from the year before, when annual net revenue was $890.4 million.

In comparison, fiscal 2002 net revenue is expected to fall by about 10%, primarily as a result of restructuring and divestitures in fiscal 2001, according to the company.

According to a company spokeswoman, based on its reduced losses before charges, Andover, Mass.-based CMGI expects to break even in the fourth quarter of 2002.

The charges recorded in the fourth quarter were related to goodwill associated with CMGI's fiscal 2000 acquisitions of AltaVista Co., Flycast Communications and Tallan Inc. and its acquisition of MediaBridge Technologies Inc. in fiscal 2001, as well as losses in its NaviSite Inc. operations.

"We continue to make measurable improvements in our performance, and our most recent quarter saw a number of significant actions," said David Wetherell, CMGI's chairman and CEO, in a statement. "We continue to aggressively restructure the operations of our core holdings and have taken several key steps to improve the prospects of these businesses."

Wetherell said continuing consolidations and cost-cutting moves will help the company achieve profitability.

Steve Frankel, an analyst at investment bank Adams Harkness & Hill Inc. in Boston, said CMGI's troubles are in large part due to its reliance on e-businesses for revenue during a very difficult time for such companies.

"Today, CMGI is chiefly uBid and SalesLink," he said. UBid Inc. is an online auction site, while SalesLink is a supply chain management and e-commerce consulting firm. "Those are fairly mundane businesses, as far as their abilities downstream to make money," Frankel added.

"[CMGI] has to continue to struggle to reinvent themselves," Frankel said. "It's just a long and painful process."

CMGI companies include portal and search engine site AltaVista, interactive marketing firm Engage Inc. and Internet professional services vendor Tallan.

In March, CMGI posted a net loss of $2.56 billion for the second fiscal quarter ended Jan. 31 (see story), compared with losses of $187.8 million for the same quarter one year ago.

CMGI's second-quarter losses were, in part, a result of noncash charges related to its past acquisitions of companies such as AdForce Inc. and AltaVista.

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