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CEO: No suitor in the wings for CMP

CMP Media's chief executive says no single offer started the company down the road to acquisition.

A particular offer was not the cause of CMP Media's decision to pursue a merger or sale, chief executive Michael Leeds said today.

CMP yesterday said it had retained investment banking firm Lazard Fréres to explore strategic alternatives for the company including but not limited to a sale or merger.

"We didn't have any specific offer that spurred this process," Leeds told employees during a conference call today. "We had a number of approaches from a variety of companies."

He said that no job cuts were planned as of today, but stopped short of making promises for the future. "We are not planning any layoffs," he said. "But that's not to say we are not going to strive for productivity in the company, because we are."

In a statement yesterday, Leeds said: "The goal of this process is to enable us to maximize stockholder value, expand our ability to provide new products and services to our customers, and enhance career opportunities for our employees."

He did not rule out splitting up the company among different buyers. "We're going to look at all kinds of offers and all kinds of opportunities," he told employees today.

"Many rumors have filtered up to my office. I can assure you we are at the very beginning of that exploration," a voicemail message to employees said yesterday. "There are no deals. We have not entered into negotiations with any potential parties. We are just beginning the exploration, with a view toward moving toward a decision as quickly as we can."

An email message, also sent to employees yesterday, went further in explaining the reasoning behind the search for a partner.

"Given our 27 years of independence and uninterrupted growth, this news may come as a surprise," the email message said. "Our objective is to continue to grow, but we believe that the market price for our stock, which does not reflect the inherent value of our assets, limits our ability to meet this objective."

During today's conference call, Leeds reiterated that the company's management had not yet made any decisions, and said the process of finding a buyer--if that was the final outcome--would take "at least several months."

Employees of the company, which has been family-owned for most of its history and is still controlled by the Leeds, pressed the CEO to explain why he would end this independence.

He said a sale would give the company more capital to expand and could increase the diversity of its products. He also noted that a sale would "allow my family to pursue its philanthropic interests more independently."

At a quarterly manager's meeting last night in Garden City, New York, which Leeds said was held early due to all the rumors about a potential merger or sale, he noted the firm has been approached by technology publishing companies, other media firms, and nonmedia firms, which he didn't identify.

"This is the era when companies are joining forces," Leeds told attendees.

If CMP doesn't get an offer it finds suitable, it won't sell, he said last night.

Other alternatives for CMP might include taking on debt to grow the company or spinning off its Net operations, he said at the meeting.

"We don't get the respect we should from the market," Leeds said.

The CEO said that if the company is sold, the profits will be shared with some employees based on seniority and level of compensation.

The Manhasset, New York-based company, which publishes technology trade magazines such as InformationWeek, Computer Reseller News, and Windows Magazine as well as technology site CMPNet, went public in July 1997 but has consistently hovered below its initial offer price of 22 dollars per share since. The 28-year-old company's stock closed at 19 today.

According to Bloomberg, CMP also said fourth-quarter net income fell 49 percent to $4.7 million, or 20 cents per share, from pro forma net income of $9.3 million or 39 cents a year earlier. The company was expected to earn 19 cents, the average estimate of three analysts polled by First Call. Revenue fell 5.9 percent to $124.9 from $132.8 million.

CMP has had a difficult few months, shuttering the long-running Byte magazine it had bought from McGraw-Hill along with suffering layoffs and missing earnings estimates. Byte was resurrected in an online-only format.

The company's stock had risen to as high as 30 on the news, and following an upgrade by the Bear Stearns investment bank. Shares were back down to 25.875 by midday trading, after opening the day at 19.