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CMGI&#039&#039s 1Q loss smaller than expected

CMGI posted a smaller-than-expected net loss in its first quarter after bell Thursday, 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 a share in the quarter.

Earnings tracking firm First Call Corp. consensus pegged CMGI for a loss of $2.13 a share in the quarter.

CMGI (Nasdaq: CMGI) shares fell 56 cents to a 52-week low of $9.06 ahead of the earnings report.

The $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 USB 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 only up 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.

During a conference call, CFO Andy Hajducky said CMGI exited the quarter with more than $800 million in cash and another $200 million on the books of its subsidiaries.

"We have plenty of cash to meet our needs for the next 30 months," he said. "We hope to reduce our cash-burn rate to $45 million a quarter by July."

Hajducky said the company hopes to whittle its base from 17 companies to 13 companies by year's end.

"Only 20 percent of our total sales are tied to Internet advertising businesses," he said.

In the quarter, CMGI pocketed more than $357.4 million from the sales of Lycos stock as well as $135.3 million and $70.9 million, respectively, from the 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,” said CEO David Wetherell in a prepared release.

Its various business units posted mixed results in the quarter.

  • Internet professional services sales, from its Tallan subsidiary, improved to $33.3 million in the quarter, up 9 percent from the fourth quarter.

  • E-business and fulfillment sales, from the likes of SalesLink, Signatures Network and uBid, recorded sales of $188.6 million, up 10 percent from the fourth quarter.

  • Its infrastructure and enabling technologies unit, which includes NaviSite (Nasdaq: NAVI), came in flat with the prior quarter at $35.1 million.

  • Search and portals sales, namely AltaVista, fell 11 percent from the fourth quarter to $60.4 million.

  • Interactive marketing sales plunged 33 percent from the fourth quarter to $48.7 million.

    In the past week, warnings from key subsidiaries Engage (Nasdaq: ENGA) and NaviSite have put CMGI shares under even greater pressure.

    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.

    The stock moved up to a 52-week high of $163.50 in January before falling to Thursday’s low.

    Seven of the 13 analysts tracking the stock rate it a “hold.”

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