CMGI Falls on Q2 Loss, Outlook

CMGI (Nasdaq: CMGI) fell 28 U.S. cents to $3.63 in morning trading Wednesday, after the Internet incubator reported a loss for the second quarter ended January 31st and said it expects losses for the third and fourth quarters as well.

The company, which is in the midst of a restructuring, said it may sell two of its subsidiaries.

CMGI reported second-quarter revenue of $342.7 million, up 116 percent from a year earlier but 6 percent below the first quarter. The net loss widened to $2.562 billion, or $7.86 per share, from $185.58 million, or 74 cents, in the year-earlier quarter. In the first quarter this year, CMGI lost $636.6 million, or $2.07 per share.

Latest-quarter results included charges of $2.02 billion for the "impairment of intangible assets," $549.5 million of amortization charges, and $100 million of restructuring charges. The impairment charges relate to acquisitions that were financed with stock during fiscal 2000, before the steep drop in Internet stock values.

"While there is still much work to do, we continue to make significant strides on our restructuring, focusing our core competencies, company assets and business activities on platforms that will build a strong base for CMGI's future," said chairman and chief executive officer David Wetherell.

Wetherell said the company is "making significant progress" in reducing its dependence on advertising revenue, and will be looking into possible future mergers, consolidations or divestitures.

CMGI said it may sell or otherwise divest itself of two subsidiaries: Activate, a provider of streaming broadcast services, and AdForce, which outsources advertising software.

The Andover, Massachusetts-based company said it expects revenue for the third quarter to total $280 million to $290 million, then grow between 3 and 5 percent in the fourth quarter. Third-quarter revenue will be hurt by the sale of Signatures Network, as well as a weak online advertising market, the company said.

CMGI said it expects operating losses before amortization charges of $236 million to $246 million in the third quarter, and $174 million to $184 million in the fourth quarter. In addition, the company said there will be restructuring charges of $48 million to $52 million in the third quarter, and $42 million to $46 million in the fourth.