Incubators ICG and CMGI crumble

Internet Capital Group (Nasdaq: ICGE) and CMGI (Nasdaq: CMGI), two Internet incubators, both took a tumble Thursday.

While ICG reported a huge loss and layoffs, CMGI fell on the dour outlook for incubators, a disappointing quarter from one of its holding companies, and news that it will give guidance Monday.

Shares in ICG were down 5.88 to 10.38, or 36 percent. CMGI shares were off 5 to 16.81, or 23 percent.

ICG posted a third-quarter loss of $263.9 million, or 94 cents a share, on sales of $16.4 million after Wednesday's closing bell. It will also lay off 35 percent of its workforce and take a fourth-quarter charge of between $25 million to $30 million.

The stock got some downgrades Thursday. Charles J Wittmann at First Union Securities downgraded to "buy" from "strong buy" and cut the stock's 12-month target price to $55 from $80 a share. Henry Blodget at Merrill Lynch downgraded the stock to "long-term accumulate" from "long-term buy." The near-term rating remained "accumulate."

Wit Soundview analyst Ryan B Alexander cut the stock from "strong buy" to "buy."

"We believe that as the company more narrowly focuses on further strengthening its top 15 private companies, ICG should be able to increasingly develop leading B2B enterprises. Over the near-term, however, we remain cautious towards ICG's common shares, as a significant majority of its market valuation continues to be driven from the company's ability to monetize existing assets/investments through the public equity markets," Alexander said in a research note.

CMGI Inc. (Nasdaq: CMGI) has been troubled by the dot-com shake-down. News that Engage (Nasdaq: ENGA) isn't doing well could also harm the company.

CMGI announced Thursday it will host a conference call Monday to review its expected operating results for fiscal 2001, hosted by David Wetherell, Chairman and CEO, and Andrew Hajducky, CFO, Executive Vice President and Treasurer.