CMGI: Last Look Ahead of Earnings (June 5, 2007) (CMGI)

If you are an investor in CMGI Inc. (CMGI-NASDAQ), you know the earnings are this afternoon after the close and you know every small cap low stock price trader is going to be watching this one closely.

Here was our full earnings preview from last week and nothing much has changed, although there a couple more add-on pieces.  WR Hambrecht, the only street analyst with estimates has a $0.02 EPS target on revenues of $259.5 million. This quarter will still have much of the H-P business in it, but we only really know what the company is targeting for year-end: up to $1.10 Billion in revenues, 12% to 14% gross margin, 7% SG&A, and 5% to 7% operating margins.

Last week the company’s @Ventures unit made a $3 million investment into Powerit Holdings Inc. as the leader in a $7.1 million Series A financing.  Powerit Holding’s US subsidiary, Powerit Solutions, provides energy demand response and demand control solutions for industrial and commercial companies. These easy-to-integrate, proprietary solutions enable major cost savings on electricity bills with no impact to productivity or quality, as demonstrated with hundreds of installations of the technology to date.

There is also some ongoing talk of a reverse stock split, but honestly betting on splits in the modern world has become as much of a coin toss as the real impact to shareholders.  We’ll have an answer as to how the company did here momentarily.  With an hour to go to earnings, CMGI is up 1% at $2.52 on the day.  Inthe last trading week shares traded as low as $2.35 and as high as$2.60.

If this does very well and gets more street attention, then the two stocks to watch for copy cat strategies are Internet Capital Group (ICGE-NASDAQ) and Safeguard Scientifics (SFE-NYSE).  Neither company has been rekindled in the same manner or to the same degree as CMGI, and traders and companies alike look for opportunities that worked well for one company that could be applied to another.

Jon C. Ogg
June 5, 2007

Jon ogg can be reached at [email protected]; he does not own securities in the companies he covers.