CMGI rises on surprise 2-for-1 stock split

Shares of CMGI rise as much as 11 percent after the company declares a 2-for-1 stock split less than a week after saying it didn't plan to do so soon.

ANDOVER, Massachusetts--Shares of CMGI, an Internet venture-fund company, rose as much as 11 percent after the company declared a 2-for-1 stock split less than a week after saying it didn't plan to do so soon.

CMGI shares rose 13.63 to 188.88 in midday trading. Earlier, the shares, which are up threefold this year, touched 195.5. CGMI announced the split late yesterday, after the markets had closed.

Just last week, chief executive David Wetherell said that while CMGI wouldn't rule out a split, it didn't expect to do one soon, causing the stock to tumble 10 percent the next day. The split may be part of a strategy by CMGI, the largest shareholder in Internet search service Lycos, to oppose the takeover of Lycos by USA Networks, some analysts said.

The company could be "looking to strengthen CMGI's currency to make an acquisition," said Ullas Naik, an analyst at First Albany in Boston.

CMGI's Wetherell has said that one option under consideration is for the company to buy Lycos itself. A larger market value would make that easier, Naik said.

Last month, Wetherell pulled his support for the USA Networks purchase, saying the terms of the agreement weren't favorable to shareholders. CMGI hired an investment banker to seek alternatives and other bidders.

USA Networks, the media company run by Barry Diller, plans to combine Lycos with USA Networks' home-shopping and other e-commerce businesses and give Lycos shareholders 30 percent of the new company. CMGI owns 18.5 percent of Lycos.

Investors have been snapping up shares of Internet companies once splits are announced on the belief that they'll soar even higher because of their more affordable prices and optimistic growth prospects. Existing shareholders still own the same percentage of the company's stock after the split.

CMGI will split its shares May 27 to shareholders of record May 13, pending shareholder approval. It marks the second split by the company so far this year.

Copyright 1999, Bloomberg L.P. All Rights Reserved.

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