CMGI Not Immune to Job Cuts

May 11 2000

ANDOVER, Mass. - It's hardly a purge, but even CMGI Inc., among the highest of the new economy high-flyers just months ago, has been forced to cut jobs amid demands by investors that Internet firms show a clearer path to near-term profits This week, AltaVista , the search engine majority owned by CMGI that last month postponed its initial public offering, cut 60 positions from a staff of about 800 A few weeks ago the company's MyWay.com custom Internet portal business cut 27 jobs from its workforce of 300 And last week, CMGI eliminated 45 jobs as a result of its merger of CMGI Solutions and Tallan Inc. An official with the company, which helps finance Internet start-ups, said the cuts were part of a broader plan implemented over the past few months to shorten the road to profitability for CMGI's 16 majority- or wholly-owned operating companies, which employ about 5,500 people.

"We're going to continue to focus on building revenues and keeping expenses in check," said Executive Vice President Bill White. "It's what's dictated by the market conditions today. Market conditions for CMGI were quite different not long ago. The company's stock, which soared past $163 a share in January, allowed it to make a spree of acquisitions and investments. But on Thursday CMGI shares closed on Nasdaq at 55-5/8.

"With the market sentiment the way it is, the Internet companies are working to contain costs and become profitable," said analyst Phil Benyola of Raymond James CMGI remains in an enviable position, with revenue coming in at a rate of $1 billion on an annualized basis But White said in recent months CMGI has shortened planned time frames for its operating companies to turn profits.

"If it was X months, make it X minus 25 percent," he said Investors want a clear road to profitability, he said. "We figured that out, and we've been acting accordingly for the last two or three months," he said Analyst Ullas Naik of First Albany said the fat-trimming at CMGI and other Internet firms "is absolutely a healthy thing ... especially as funding becomes a little bit more constrained."