CMGI Sinks on Unpredictable Forecast

CMGI, Inc. (Nasdaq: CMGI) fell US$1.16 to $5.69 Friday after the company, which supports and operates Internet businesses, lowered its financial projections for the current fiscal year, ending July 31st, and said it can no longer predict when it will meet its targets.

"As with many Internet-centric companies, current market dynamics for several of CMGI's businesses are proving extremely difficult and unpredictable," the company said.

Revenue projections for its operating subsidiaries are "under review," CMGI said, and the company as a whole is "not likely" to meet its revenue target of $1.65 billion for the current fiscal year or its goal of consolidated gross margin of 30 percent for the fourth quarter.

"Profitability targets and timing are under similar review," said CMGI, which had previously predicted it would break even before taxes, depreciation and amortization in the fourth quarter of this year.

The company added that it is not in a position to set a new goal for profitability.

CMGI said it now expects revenue for the second quarter ending January 31st to total $335 million to $345 million.

The company said it is continuing its plan, announced last September, to reorganize and streamline its holdings to help it reach profitability. As part of the plan, CMGI said Friday, it is "exploring strategic alternatives" for its ExchangePath unit and discontinuing services provided by the division.

"Without question, the capital markets and the economy at large are facing new and challenging conditions," chief executive officer David Wetherell said. "Nonetheless, we expect that the scope and role of the Internet as a central medium for communication and commerce will continue to grow globally at an exponential pace."

CMGI said that while it is no longer able to project cash burn levels for the remainder of the year, it does expect cash and cash equivalents of $600 million to $700 million by July, the end of its fiscal year. Cash and marketable securities of $1 billion currently on hand "are expected to adequately fund CMGI's operations through to EBITDA breakeven," the company said.

The Andover, Massachusetts-based company said it will issue further guidance on expected future results when it reports second-quarter results on March 13th.