CMGI, Inc. (Nasdaq: CMGI) optimists bid shares up 9 percent Monday ahead of the Internet incumbator's fourth quarter earnings. CMGI also purchased Signatures Network in its latest acquisition.
Shares in CMGI rose 7 5/8 to 92 7/16 Monday morning. First Call consensus expects CMGI to report a fourth quarter profit of $4.08 a share due to investment gains. All nine analysts watching the stock maintain a "buy" or "strong buy" recommendation. Last quarter, the company stumbled on an earnings miss.
Signatures Network, formerly Sony Signatures, is a music and celebrity licensing and event merchandising company. Under the terms of the acquisition, Signatures Network will become a majority-owned subsidiary of iCAST, CMGI's Internet entertainment company led by Neil Braun, former President of NBC Television Network.
"We intend to make iCAST and Signatures Network leading entertainment brands on the Web," said David Wetherell, CMGI Chairman and CEO in a company release. "The acquisition of Signatures Network and its significant celebrity assets, represents an important addition to our core competencies in content development and community building," he added.
Headquartered in San Francisco, Signatures Network's has merchandising and licensing rights to more than 100 artists, entertainers, and celebrities, including the Beatles, Madonna, Barbra Streisand, Bruce Springsteen, and KISS. The company's revenue for the fiscal year 1999 was $57 million. Financial terms of the CMGI deal were not disclosed.
This latest acquisition continues CMGI's metamorphosis into something more than an investment company. CMGI said it will acquire AdForce for an estimated $515 million last week, making CMGI an owner of majority interests in several Web advertising management companies. The company also has the AltaVista portal in its network.
And there's the investments in the CMGI portfolio. Ullas Naik, an analyst at FAC/Equities, said CMGI stands to pocket big gains from its investments this quarter. Naik has CMGI reporting earnings of $4.03 a share with operating revenue of $51.7 million.
He added that he is looking forward to updates on CMGI's portfolio companies. Adsmart, Raging Bull and Navisite appear to be plowing through financial goals said Naik.
Upcoming quarters, however, will show a steep revenue increase for CMGI operating companies. "They are developing real revenue," said Naik. "Very soon, revenue for CMGI will be close to Yahoo! and Excite@Home," said Naik.
Keith Benjamin's, an analyst with BancBoston Robertson Stephens, also said CMGI continues to rank on the top of his list for its savvy strategies. Benjamin said he believes CMGI will continue to pursue investments to round out their Internet outsourcing in its Web community and eCommerce areas.