CMGI bills itself as "a company constructed of companies," and
having already collected over 60 internet ventures in the US, the
webglomerate is coming after Asia in a 50/50 joint venture with
Hong Kong's Pacific Century CyberWorks.
In order to meet the funding needs for their half of CMGI Asia,
PCC placed 188 million new shares at HK$15.80 (US$2.04)
and will net $2.906 billion. BNP Peregrine, however, has an
option to buy another 60 million shares at the same price, and if
the option is exercised the total amount netted by PCC will be
$3.8 billion -- more than enough to fund the 2.945 billion
earmarked for the JV. PCC's placement dilutes shareholdings
by just less than 2.1% and brings the total number of shares
outstanding to 9,255 million. Assuming the option is exercised in
full, the total dilution will be 2.7% with 9,315 million shares
outstanding.
This is not the first time for CMGI and PCC to get together. A
September 1999 $2.7 billion (US$350 million) equity swap
began the two companies' relationship and gave CMGI 4.9% of
PCC, relegating original 60/40 PCC shareholder Intel to a
distant third place with less than 1%.
Though there are over 60 companies in CMGI's corral, at first
only four -- AltaVista, 1ClickCharge, iCAST, and Engage
Technologies -- will team up with CMGI Asia. Of the four, only
Engage is listed (Nasdaq: ENGA). Engage's operating expenses
have at best been more than two times its revenue and the
company has accumulated net losses of more than US$66
million in the past three years. CMGI Asia will hold 60% of
these sub-JVs with the individual operating company holding the
other 40%.
CMGI reported net income in 1998 and 1999. However, these
positive bottom lines were the result of non-operating income
sources with the company's operations alone bleeding money
(US$127 million for the fiscal year ending July 31, 1999 and
already US$275 million in the following quarter).
For PCC, its US$58 million investment in more than 25 internet
firms will be boosted by the possible addition of a range of
American internet companies which already have
well-established brand names. But the "company constructed of
companies" strategy, for both CMGI and PCC, still seems to
lack that one crucial factor that will eventually become
somewhat important: profit. |
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