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A long winded post on CMGI. CMGI, ENGA, and NAVI have gotten killed in the past few days. For some reason people really like to pick on CMGI a lot. The funny thing is these people have no idea what CMGI does. And I don`t think most of them know how to read a balance sheet either. Oh well. A few highlights from the conference call. They reduced cash burn from $242 million in Q2 to $165 million in Q3. They reduced their operating loss from $191 million in Q2 to $131 million in Q3. That operating loss is expected to drop to $72-$78 million in Q1FY2002 and improve 20% each quarter there after. As of June 11 2001 CMGI had consolidated cash and cash equivalents of $785 million, $87 million in readily tradable securities, $171 million in public companies subject to lock-up agreements. In total they have over a billion in cash and publically trade securities. This amount doesn`t include the value of CMGI`s stock holding in ENGA and NAVI. They expect to exit FY2002 with $325 million in cash assuming no other divestitures are made. They have 12 quarters of cash left(up from 9 quarter in March), and will have more if they sell some companies(NAVI). CMGI will survive for a long time, there is no question about that. But that doesn`t mean people should buy the stock. CMGI has cut their burn rate, sold off their struggling companies, cut operating losses, etc. But now they have to prove they can turn the companies that are left in the stable into productive and profitable organizations. I will break down each segment. The loss figures I`m using don`t include one time charges such as restructuring, in-process research and development expenses, depreciation and amortization of intangible assets and stock-based compensation. The numbers I post are basically recurring losses. It doesn`t paint an accurate picture if you include the one time charges in the loss number. That is why I laugh when these reporters keep saying CMGI lost a billion dollars last quarter. In reality CMGI only lost $131 million. eBusiness and Fulfillment segment: This segment had $178 million in revenue and $3.6 million in losses last quarter. Clearly this segment is very close to breaking even. Hopefully it can reach that mark in the next 6 months. We all know uBid is doing great and is CMGI`s strongest company as of today. DW said uBid acutally hit a peak of revenue that they could put through their existing facility. Luckily, Saleslink built a new facility that increases uBids capacity by more than six fold.. uBid is now ramping up their inventory in Saleslink`s new state-of-the-art Memphis facility. DW said uBid has about $50 million in auction sales per month. That would equal about $150 million in revenue per quarter from uBid. So I assume Saleslink generated $28 million last quarter. Search and Portal segment: This segment had $37 million in revenue and $17.2 million in losses last quarter. Losses have been cut in half compared to the prior quarter. Either way you slice it Alta Vista and MyWay are very close to being profitable. I imagine Alta Vista is accounting for the majority of that $17.2 million loss(maybe $12-$14 million). I don`t know if CMGI really needs MyWay, it isn`t generating a lot of revenue and I don`t think it will be a huge revenue generator in the future. CMGI should sell it and focus on Alta Vista. I have been a little worried about Alta Vista, mainly because of competition from Google and Inktomi. Google is eating everybodies lunch in the consumer search portal side of the business. Their traffic is growing at a phenominal pace. I have used AV and Google. I like Google but you can`t narrow down your search options as much as you can with AV. AV is a real hardcore search engine. It has mainy features that Google just doesn`t have. Having said that, most people who search on the web are doing basic searches anyway. That is why Google has become so popular. But AV has also been more focused on it`s search software, I don`t think they are heavily focused on beating Google in the consumer search space. After all, ad revenue is terrible now, so AV is focused on their search software instead. AV has over 1,200 enterprise customers, Google only had 120 enterprise customers(as of the end of 2000). AV is much stronger in this area, but has serious competition from Inktomi. For the past few months I have been wondering what in the he11 AV was doing. I thought they have been sitting on their hands doing nothing to combate Google and Inktomi. But yesterday, to my delight, AV released news on two new products that they have been working on for 10 months. And let me say this, these new products could be huge for AV. If you haven`t read the press release I suggest you do so. The two new products are the AV Enterprise Search and AV Personal search. These products will allow companies to search through their corporate intranets. It can search through every single piece of corporate information, including email and hard drives. These products can sift through 30 different languages and more than 200 computer formats. The AV Enterprise Search product "supports employees inside the corporate firewall by enabling them to find information wherever it resides within company servers, regardless of data format." What company wouldn`t want this? That is why these two products could really put AV on top of the search software game. Check out these quotes: "This could be a great product for many businesses," Dana Gardner, an analyst with the Aberdeen Group, told NewsFactor. "The idea has been tried before," said Gardner, "but none of the earlier attempts was as powerful or as easy to use as AltaVista`s new product." "Earlier products were offered by Autonomy Corporation (Nasdaq: AUTN - news), Verity (Nasdaq: VRTY - news) and Excaliber Technologies. Each one has been only moderately successful, coming up short on offering complete coverage." Some people say this new software could invade peoples privacy(email, etc.). "AltaVista says it has already addressed the potential problems. According to the company, businesses can tailor the software so that certain areas of an office`s computing system would be off-limits." Interactive Marketing segment: This segment reported $30.3 million in revenue and $25.3 million in losses. Now ENGA just reported revenue of $25.4 million and $23.4 million in losses for their last quarter. What does this mean, well if my math is correct Yesmail generated about $5 million in revenue and $1.9 million in losses. That is extremely important because it is a given that ENGA will one day buy Yesmail. But it won`t happen until Yesmail becomes profitable, or at least I`m assuming it won`t until they become profitable. The last thing ENGA wants is more losses per quarter. That is why they didn`t buy Adforce. Yesmail continues to grow it`s subscriber base. All they need to do is reach profitability and then ENGA will buy them. Yesmail is a very important peice of the puzzle for ENGA and I can`t wait until the two merge. ENGA is struggling in it`s media business, but their software sales are increasing every quarter. This is important because the future for ENGA lies in their software not their media. Their software products are what separates them from DCLK, TFSM, etc. Their multichannel software suites look especially promising. I wanted to adress one thing DW said during the conference call, and that was he felt the online ad market won`t rebound for about 3 more years. His main reasoning was by that time broadband will be more prevelant. I disagree, I think the online ad market will only take 1 year(maybe a little longer) to rebound. Some will wonder why CMGI is hanging onto ENGA if DW doesn`t think the online ad market will recover for 3 years. The reason is, like I said before, ENGA is focused on selling their marketing software. If ENGA didn`t have this part of their business I`m almost positive DW would have sold the company. But ENGA`s software is very promising, and they are already generating 50% of their revenue from software sales. Combine Yesmail with ENGA(once they are profitable) and you will have a very strong and viable company. Internet Professional Services segment: This segment reported $21 million in revenue and $712,000 in losses. Tallan seemed to have a tough quarter in terms of sales. They also dipped into the red last quarter. I like Tallan, it is a solid company. But I don`t think it will be growing like a weed in the coming years. That is why I wish DW would start purchasing some other companies in this segment and merge them with Tallan. I have stated before that PXCM would have been a great acquisition, but somebody just bought them last month. Maybe Tallan could buy Molecluar(a CMGI @venture investment). Molecular is profitable and generating nice revenue. Anyway, I like this segment of CMGI`s business and I hope they keep it. Technical based consultants will definetely be needed in the future. I just feel that this segment is a little weak right now. An acquisition should be made to beef it up. Infrastructure and Enabling Technologies This segment reported $34.6 million in revenue and $62 million in losses. NAVI had $26.2 million in revenue and $29.3 million in losses in their most recent quarter. That means the other companies in this segment(Activate, Equilibrium. CMGion, and NaviPath) generated an appalling $8.4 million in revenue and $32.7 million in losses. I`m glad DW is dumping most of these. All of those listed(expect for CMGion) should be CMGI @venture investments, not majority owned companies. DW hasn`t said anything about Equilibrium but I think they are the next company to be sold or shutdown. One thing that disappointed me was DW didn`t mention anything about CMGion. That could be positive or negative depending on how you look at it. On the positive aspect, not mentioning it means they are still keeping very quite about it. And you would think if it was a bust they would have already thrown in the towel by now. Plus somebody said CMGion had job listings on Monster.com. I think the company will launch very soon, whether it is successful or not is another story. NAVI seems to be doing well in this tough environment. Their revenue has stabalized and they are reducing their losses. I wish DW would hold on to NAVI but I understand why he is selling it. NAVI will never catch EXDS, and most of NAVI`s competitors have been acquired. So it will be hard for CMGI to build up NAVI through acquisitions. Plus, even though NAVI is reducing their losses it`s not happening fast enough. Once revenue growth picks up those losses will fall dramatically but who knows how long it will take for that to happen. I`m also wondering if CMGI will get a fair price for NAVI, I don`t think they will. Not many companies want to acquire a company that is losing about $26-$28 million per quarter. While EXDS would love to have NAVI, I don`t know if they are willing to take on those losses. This brings me to my last comment on this segment. If they do sell NAVI and the other companies in this segment, will CMGion be the only one left? @ventures segments: Not much happening in this segment. CMGI is trying to reduce burn so I don`t think this segment will see too much action in the next six months. They made some follow up investments in the quarter but the amount invested was only a few million. Like I said before, CMGI won`t be closing it`s doors anytime in the next 3 years. They will be around long after the market and economy have rebounded. The question is can they turn this company into a cash generating machine or will they just tread water for the next few years. BTW, if CMGI does get some cash from NAVI and sells or shuts down all of the companies in the infrastructure segment(except CMGion), their burn rate will fall dramatically. They won`t need all of that cash. Strategic acquisitions maybe(build up Tallan, etc.)? In conclusion, CMGI seems to be focusing on a core group of companies. They are ENGA, uBid, Alta Vista, Yesmail, Saleslink, and Tallan. I guess we can throw CMGion in that list. I didn`t include MyWay and Equilibrium because I think those two will be sold off in the next few quarters. Yesmail, Tallan, Saleslink, and uBid are all extremely close to breaking even(roughly $1-$3 million in losses per quarter for each of them). ENGA and AV are focusing heavily on high margin software which should get them to profitability very fast. ENGA, uBid, Alta Vista, Yesmail, Saleslink, and Tallan acounted for almost all of CMGI`s revenue last quarter(roughly 90%) yet only accounted for about a third of CMGI`s total operating loss. I say those companies listed had total recurring operating losses of about $45 million last quarter. So it makes perfect sense to focus only on those companies. I also hope CMGI will look to make strategic acquisitions to build up some of those companies. Of course they will only buy profitable companies now. Add in to the mix CMGI`s continued focus on their @venture investment portfolio and this will be one big-bad-motherf#cking company once the dust settles. Sorry for the harsh language, I just got so excited.lol I hope everybody has a safe and happy Summer! |
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| aus der Diskussion: | Die Quartalszahlen von CMGI |
| Autor (Datum des Eintrages): | robbe_III (13.06.01 22:33:25) |
| Beitrag: | 24 von 24 (ID:3733754) |
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