CMGI Will Sell or Close iCast, 1stUp.com
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CMGI, the Andover, Mass., Internet holding company, will sell or shut down two majority owned operating companies -- iCast and 1stUp.com -- as part of an ongoing restructuring.
"It's painful to go through but I think it's best for the company and it saves cash for larger, faster-growing companies," David Wetherell, CMGI's chairman and CEO, said in a conference call after markets closed.
iCast is an entertainment portal that employs about 200 people in Woburn, Mass., and New York. The decision does not come as a surprise. A month ago, iCast laid off 30 people and strongly hinted that it was for sale.
"We firmly believe music and entertainment will provide opportunities in the online space," Wetherell said. "Our decision is based on the capital requirements required to fund this nascent business and the profitability horizon, which is several years away."
If no buyer is found, iCast will be closed January 31.
1stUp.com provides free, branded Internet access for companies. The firm is based in San Francisco and was founded in October, 1998. Again, CMGI said the amount of capital and long wait before projected profitability were the primary factors in the decision.
As a result of the iCast and 1stUp moves, CMGI will take a charge of $8 to $10 million in the first quarter and $75 to $80 million in the second quarter. Those figures also include restructuring at Engage, the Andover online ad firm, which laid off 175 in recent months.
CMGI stressed that despite the sluggishness in the Internet ad revenues and the poor IPO market, it would be profitable in four of its five operating segments by the end of fiscal 2001. It also said it has enough cash, without raising money from outside the company, to last 30 months.
Shares of CMGI were down 1.125, or 7 percent, to 14.5 ahead of the news Monday. In the last 52 weeks it has been as high as 163.5 and as low as 12.875.