Word: cmgi
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...portal when you can build your own? Internet incubator CMGI will unveil a beefed-up version of its AltaVista search engine today. Promotion spending for the next nine months is budgeted at $120 million, $8 million of which will be spent today. That's a lot of money, for sure, but it's still much cheaper than getting a portal on the open market. Yahoo wanna-be Lycos, another big CMGI investment, is currently worth $5 billion now, with the real Yahoo currently trading at nearly nine times that figure...
...trying to figure out how Internet companies will ultimately figure in the economy--Will they crash and burn? Or soar even higher?--CMGI is a good place to start. It is a company very much in the middle of the clash between the old and new market models, and between old and new media, that is occurring all over Wall Street. To smitten Internet investors today, profits don't matter; it's the new economic order of the future that counts. So buying a company's stock on the basis of profits is irrelevant. These investors look only...
That kind of thinking has created a huge gap between the valuations of Internet stocks and the rest of the world. "It can't last forever," says Intel chairman Andy Grove, whose company owns 8.6% of CMGI. "The Web world has one set of rules and the rest of the world has another." In other words, something's got to give. Last week some of CMGI's investors took their money off the table, and CMGI traded as low as $185 before bargain hunters--and only in the Net world is $200 a share a bargain--drove it back...
Wetherell can't believe that anyone is questioning these never before reached values. He says that not only is the Internet not a high-risk investment, but it is also "absolutely the safest bet I know." He has been making this wager since 1994, when CMGI (then known as College Marketing Group) was still a company that hawked textbooks to college professors. He took the firm public and used the proceeds to invest in then obscure companies such as Lycos and Booklink--the latter of which he would later sell to AOL for $70 million. The soft-spoken, laid-back...
Even if the Lycos deal goes through as currently configured, Wetherell and CMGI stand to make close to $700 million. And with companies such as Chemdex, Silknet, Raging Bull and Medical Village preparing to go public and perhaps become the next Lycos or GeoCities, Wetherell's viral growth justifications of wild valuations will continue to be gospel in the Net economy. "David is so confident and so smart," says Bill Martin, 21, a University of Virginia dropout and one of the founders of Raging Bull, a financial Web community half-owned by CMGI. "But he's a guts...