NaviSite, Inc. (Nasdaq: NAVI) rose 7/8 to 3 3/8 Friday after majority owner CMGI, Inc. (Nasdaq: CMGI) said it will accelerate a planned US$80 million financing agreement to the company. As of early trading Monday, the stock was trading at 3 1/4.
CMGI is giving NaviSite the funding, which was increased from an original $50 million, to compensate for potential losses the company might see from its institutional lenders. The companies are negotiating terms of the agreement, and expect a definitive deal within two weeks.
Founded by CMGI in 1997, NaviSite provides Web hosting and application
services 
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"The business metrics for NaviSite continue to exceed expectations," said CMGI chairman David Wetherell, "particularly as NaviSite increases its focus on large and middle-market enterprise customers."
Wetherell believes the managed services sector in which NaviSite operates is a promising sector in the Internet market, and said that CMGI "remains committed to helping NaviSite reach its full potential."
NaviSite reported a 455 percent year-over-year increase in revenue for the
latest fiscal quarter, as well as a smaller-than-expected loss. The company
said investments in technology and staff have resulted in two new
customer data centers being opened during the quarter.
Over the past year, NaviSite shares have traded as high as 164 15/16 and as low as 3 3/8. The stock has come under pressure because of analyst downgrades and a weak Internet sector, as well as CMGI's announcement that it plans to cut some of its dot-com investments -- though the company has said NaviSite is not one of the properties on the auction block.
In September, CMGI announced a reorganization designed to group its interests into like categories. As part of the plan, the company said it would sell some of its holdings in order to focus on its more profitable investments.
CMGI closed Friday up 1/16 at 10 1/8.
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