CMGI taking US$90m in restructuring charges

ANDOVER, Massachusetts--CMGI Inc, the Internet investment firm, said it will cease funding Web entertainment site iCast Corp and take US$90 million in charges as it restructures after a 90 percent stock slide this year.

The company also said in a conference call that it expects revenue to grow 80 percent to 90 percent to US$1.65 billion in the fiscal year ending October 2001, and that it has enough cash to fund operations for the next 30 months.

CMGI said it hopes to find a buyer for iCast and will not put new money into the startup after Jan 31, 2001.

Since August, the company has cut 400 to 500 jobs at its operating companies as CMGI seeks to accelerate its move to profitability in a market that has become hostile to Internet companies. Rival Web incubator Internet Capital Group Inc said last week it would cut 35 percent of its workforce and write off some assets to bolster its finances.

"Market conditions necessitate fewer and shorter runways to achieve our ambitions," David Wetherell, chairman and chief executive, said during the call with reporters and investors.

CMGI has pledged to earn a cash profit by October 2001. The company will announce Dec 14 that it took an US$8 million to US$10 million restructuring charge in the quarter ended Oct 31, and will take a further US$75 million to US$80 million charge in the quarter ending Jan 31.

CMGI today has US$930 million in cash and US$210 million in saleable securities, enough to last for two and a half years, Wetherell said. The company recently sold stock in Lycos Inc, Pacific Century Cyberworks Ltd, and CriticalPath Inc to raise money, said Andrew Hajducky, chief financial officer.

CMGI-backed startup MyWay.com, a content delivery firm, announced plans last month to cut or relocate 130 jobs. CMGI will also merge two operating companies, auctioneer Ubid Inc and marketing firm Saleslink Corp, giving it 14 companies--twice its eventual goal of six or seven, Wetherell said.

Cash

In an interview last month, he said Andover, Massachusetts- based CMGI has "dramatically" cut cash usage by eliminating jobs and shedding or merging companies. CMGI disclosed its current cash usage and planned path to operating profits Monday in the wake of its latest board of directors meeting last week.

It's the second time in two months CMGI executives have briefed investors. In September, the company said it would organize into five operating units, merge its three venture funds into a single open-ended investment pool, and reach operating profitability in four of those businesses by July 2001.

At the time, analysts estimated the company was burning US$25 million a month on venture investments and US$50 million a month on operations, and had two years of resources remaining.

CMGI Monday said its venture investment arm has "slowed" investments and is now spending US$30 million to US$32 million per quarter. CMGI @Ventures has made 11 investments this year and now has a total of 55 after the sale of several, including Firsthalf.com to EBay Inc and EGroups to Yahoo Inc.

"A soft IPO market has no impact on the availability of investment opportunities," said Wetherell.

CMGI said revenue in the fiscal first quarter ended Oct 31 fell 3.5 percent from the previous quarter, while the gross margin fell to 11 percent from 18 percent. CMGI expects a gross margin of 20 percent to 23 percent for the year that ends in July 2001.

The job cuts have mainly come at online marketer Engage Inc, MyWay.com and Web directory AltaVista Co. CMGI hasn't cut overall employment because it could shift workers into other operating companies, which have a total of 500 to 1,000 unfilled jobs.

CMGI shares fell US$1.13 to US$14.50 in regular New York trading. Shares are down two-thirds since the first announcement Sept 7.