CMGI Inc. is the latest company to jump in the free Internet access game with the acquisition of 1stUp.com, a San Francisco-based free Internet provider.
The deal was announced late Monday after the close of U.S. markets.
With nearly 50 companies in tow, CMGI (CMGI) already represents a diverse network of Internet companies worldwide.
1stUp.com last month partnered with AltaVista to provide Internet access for their ad revenue driven ISP. The free ISP and its affiliates currently serve more than 400,000 registered users and is reportedly adding more than 50,000 new subscribers each week.
David Wetherell, CMGI chairman and chief executive officer, said the Internet incubator’s mix of companies make 1stUp.com attractive.
“This acquisition serves to provide enormous benefits to both 1stUp.com and a significant number of other CMGI network companies,” Wetherell said. “The increases in Web advertising spending, in tandem with the declines in the cost of bulk connectivity, make the 1stUp.com model an attractive and highly scalable one.”
1stUp.com’s founding management team, including Charles Katz, chief executive officer, will remain with the company under the leadership of CMGI. Katz said the deal with CMGI would provide the company with the financial leverage to expand their services.
“With the support and financial backing of CMGI, 1stUp.com is well positioned to expand its roster of partnerships and increase the economies of scale for our business,” Katz said. “CMGI has a keen understanding of the Internet marketplace and has built a successful network of businesses that today include some of the leading brands on the Web. We look forward to being a part of the next generation of CMGI success stories.”
Wetherell added that as part of the CMGI network, 1stUp.com will benefit from potential business deals with other CMGI affiliated companies like NaviNet Inc., for network infrastructure and online advertising specialist, Engage Technologies.
“Add to that the increased efficiencies we can provide through companies such as NaviSite, NaviNet, Adsmart and Engage (ENGA)., and this is an even more compelling value proposition.”
Equally, Wetherell said CMGI plans to offer 1stUp.com’s customized free access branding services to its fifty odd subsidiaries and e-commerce partners.
“The single largest trend affecting ISPs is low-cost Internet access, and we’ve been anticipating and building for this eventuality for several years,” Wetherell said. “1stUp is the culmination of this strategy and as part of the CMGI network, we look forward to offering this service to our ISP, OEM and e-commerce partners.”
The stock transaction is expected to close next month, 1stUp.com will join the CMGI network as a majority-owned subsidiary in the operating group.
Separately, CMGI late Monday reported fourth-quarter earnings of $4.24 a share, ahead of analysts’ estimates of $4.08.
