CMGI loss smaller than expected

CMGI on Thursday posted a smaller-than-expected net loss in its first quarter, losing $74 million, or 25 cents a share, excluding charges, on sales of $366.1 million.

Including a variety of charges, the Internet holding company posted a loss of $636.6 million, or $2.07 per share in the quarter. A consensus from earnings tracking firm First Call/Thomson Financial pegged CMGI for a loss of $2.13 a share in the quarter.

CMGI Stock price from December 1999 to present.

Source: Prophet Finance

In the past week, warnings from key subsidiaries Engage and NaviSite have put CMGI shares under greater pressure. The Internet investment company recently began reducing the number of its operating companies and has abandoned plans for a $1.5 billion international Web venture fund.

CMGI shares fell 56 cents to a 52-week low of $9.06 ahead of the earnings report, which came after market close.

CMGI's $366.1 million in sales represents a 184 percent improvement from the year-ago quarter when it lost $122 million, or 54 cents a share, on sales of $129.1 million. Quarter to quarter, however, CMGI sales were down 3 percent.

But analysts were more concerned with the company's ability to cut operating expenses in the hopes of eventually reaching profitability.

"Revenue isn't that big of an issue," said Safa Rashtchy, an analyst at U.S. Bancorp Piper Jaffray. "It's more important to see if it's able to cut down its losses and at least show some path toward profitability."

In the quarter, CMGI's operating expenses came in at $609.3 million, up 158 percent from the year-ago quarter but up only 1 percent from the prior quarter. Excluding one-time charges, CMGI posted an operating loss of $243.1 million, or 79 cents a share, up from $229 million, or 78 cents a share, in the fourth quarter.

It also pocketed more than $357.4 million from sales of Lycos stock as well as $135.3 million and $70.9 million, respectively, from sales of Kana Communications and Critical Path stock.

"In line with our continuing evolution as an operating company, the first quarter of this new fiscal year marked the beginning of our aggressive steps to foster growth and achieve market leadership and profitability across all business segments," CMGI chief executive David Wetherell said in a statement. "We've made several important steps toward these goals, and we will continue to focus and invest resources in the strongest, most strategic businesses for CMGI's future in order to deliver value to our stockholders."

The company told analysts that it expects to reach profitability by the end of the fiscal year, a prediction that most analysts call a stretch.

In fiscal 2000, CMGI lost $1.4 billion, or $5.26 per share, on revenue of $898.1 million. Last quarter, CMGI topped analysts' estimates when it posted a loss of $142.8 million, or 49 cents a share, on sales of $377.2 million.

Analysts are projecting a fiscal 2001 loss of $7.85 a share.