CMGI was a high-flying internet stock selling at $200 per share in early 2000. Since then the stock price plunged over 98%. What makes CMGI interesting is that it posted almost $400 million in revenues, it is profitable and it has a significant amount of assets including $260 million in cash. The company's total debt is only $18 million.
Insiders own about 13% of the 401 million shares outstanding. Institutions own 20% of the 350 million share float (shares in public hands). The stock has excellent trading volume - over 2 million shares daily. The balance sheet is solid with $260 million (0.65 per share) in cash and a book value of $0.75 per share.
The major negative is the company has over 460 million shares outstanding and it will increase that number. On August 2, CMGI will be acquiring Modus Media Inc., a privately held company for $157.5 million in CMGI stock plus $73 million in cash. With that many shares outstanding, there is always the potential for a reverse stock split.
Numbers
The company's third quarter and nine-month sales and earnings for the period ended April 30 are shown below.
Third Quarter Nine Months
2004 2003 2004 2003
Revenues (x1000) 105,789 106,109 300,956 339,105
Earnings (x1000) 69,402 76,932 93,777 -199,918
Earnings/Share 0.17 0.20 0.23 -0.51
Shares Outstanding 400.7 million
CMGI reported net income of $69.4 million, or $0.17 diluted earnings per share, for the third quarter of fiscal 2004. This compares to a net loss of ($5.5 million), or ($0.01) diluted loss per share, for the second quarter ended January 31, 2004. Net income in the third quarter of fiscal 2004 included a non-cash income tax benefit of approximately $74.7 million as a result of a reduction in the company's estimate of certain income tax liabilities that had been included in accrued income taxes on the company's balance sheet.
George McMillan, president an CEO of CMGI, Inc., said, "The revenue has continued to grow in the third quarter as a result of strength in the United States plus contribution of a new business wins. Non GAAP operating loss has also improved due to leaner operations. Customer demands to build inventories in anticipation of increased sales required net use of cash, but we have also made progress in inventory management and we continue to work to improve our vendor terms.
Finally we are excited by our acquisition of Modus Media, Inc. This acquisition, which is on track for a calendar third quarter closing, makes CMGI a global leader in supply chain management, in addition to our other operating and venture assets."
Products
CMGI Inc. provides technology and e-commerce solutions that help businesses market, sell and distribute their products and services through its majority-owned subsidiary, SalesLink Corporation, and its wholly owned subsidiary, SL Supply Chain services. The company's operating subsidiaries operate in one segment: E-Business and fulfillment. In addition, CMGI's affiliated venture capital arm is comprised of venture capital funds that focus on investing in technology companies.
SalesLink's programs are a form of outsourced manufacturing support services in which clients retain SalesLink to plan, buy and build-to-order sub-assemblies for computer equipment, the telecommunication industry, software and consumer electronic products. SL Supply Chain supports its customer base with supply chain design and consulting, as well as outsourced operations solutions including supply base and inventory management, manufacturing, configuration, assembly processes, e-commerce, order management and customer service.
Conclusion
The stock certainly has the ingredients to move at least 50 to 100% from this low point.
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