ModusLink offers an integrated portfolio of business processoutsourcing and technology solutions delivered across four corecompetencies: Supply Chain, e-Business, Aftermarket  and EntitlementManagement.

Many of the online quote systems will be slow to update their numbers,so we wanted to update prices.  Its 52-week trading range is now $8.89to $15.45, but before yesterday’s huge drop its 52-week low had been$9.36.

Jon C. Ogg
September 30, 2008

It also posted an operating loss of $15.4 million, compared with anoperating loss of $2.4 million last year and its net loss fromcontinuing operations was $18.6 million or -$0.39 EPS, compared to anet loss from continuing operations of $6.2 million or -$0.13 EPS inthe same period last year.  Gross margin was 10.4%, down from 12.1% inthe same period during last year.

The renaming of CMGI to ModusLink Global Solutions, Inc. will start atthe open tomorrow, Tuesday, September 30, 2008, and the new stock willtrade on NASDAQ under the symbol "MLNK."

CMGI closed down 14% at $8.89 on light volume and its 52-week trading range "was" $9.36 to $15.45.

Jon C. Ogg
September 29, 2008

The ModusLink owner and incubator for tech and alternative energy announced a loss at -$0.05 EPS on $239.2 million in revenues.  There was only one real estimate out there and that was for $0.08 EPS on $282.1 million in revenues.  Keep in mind that the company counted its non-GAAP operating income of $7.6 million and it also claimed a 230 basis point improvement in gross margin.  Its operating income after items was listed as $10,000.00.

The company lowered its own prior fiscal 2008 guidance and put the new range at $1.05 to $1.10 Billion in revenues with operating in come at 2% to 2.5% of revenues.  Back in March, the company guided to a range of $1.10 to $1.15 billion in revenues and operating income, before any restructuring expenses, to be approximately 2.0% to 2.5% of revenue.   The company also noted that restructuring charges would run in the $5 to $8 million range this year, which looks in line with prior targets it set.

Its cash and cash equivalents and available-for-sale securities of $248.6 million at the end of the third quarter and continued to have no outstanding bank debt.

Unfortunately for shareholders, the stock is being hit in after-hours trading by about 14% down to $12.83.  Before this drop shares had recovered almost 40% from the March lows.  Missing a single estimate is one issue, but lowering your own guidance is another.  That’s holding true even for this cult stock.

Jon C. Ogg
June 9, 2008

Unfortunately there is only one real estimate out there and that is for earnings of $0.08 EPS on $282.1 million in revenues.  With only one estimate and with how this has performed after earnings in the past, it is obvious that relying only on the raw numbers is not the way to go.  Back in March, the company gave the following guidance for this Fiscal Year:

• Revenue of $1.10 billion to $1.15 billion;
• Operating income before any restructuring expenses, to be approximately 2.0% to 2.5% of revenue in fiscal 2008;
• Restructuring expenses for fiscal 2008 are expected to be $5 million to $8 million.

The company also repurchased 507,000 shares for some $6 million last quarter, with it still having authorizations of $36 million available for future repurchases in its previously announced $50 million stock buyback plan.

The company has made a better transition away from being an incubator only into an operating company via its ModusLink supply chain unit. 

More interesting than elsewhere, CMGI has slowly and quietly seen a rapid share price appreciation of nearly 40% above its March 2008 lows.  While it has had a hard time staying above $15.00 in the last two weeks, its move has nonetheless been an impressive one.

As of January 31, 2008, CMGI had working capital of approximately $320.4 million compared with $319.4 million at January 31, 2007. Included in working capital as of January 31, 2008 were cash, cash equivalents and marketable securities totaling $265.2 million compared to $275.0 million at January 31, 2007. 

Its current market cap is roughly $730 million.  Shares are up less than 1% at $14.90 today, and the 52-week trading range is $9.66 to $21.80.

Jon C. Ogg    
June 9, 2008

This one tends to operate on a pattern of its own because the targets for earnings and revenues are few and far between, but we did give a full earnings preview here.  As far as guidance, it continues to expect revenue of $1.10 billion to $1.15 billion and operating income to be about 2.0% to 2.5% of revenue in fiscal 2008.

While CEO Joe Lawler was a bit cautious in tone, he did note, "…….The challenging economic environment requires lower cost supply chains, faster time to market and swifter response to promotions and liquidations to reduce excess inventory. These factors play to the strengths of our business model and are contributing to our growing sales pipeline. Based on the strength of that pipeline, we are maintaining our full year financial guidance.”

As of January 31, CMGI’s working capital of $320.4 million comprised of cash and equivalents of $265.2 million. During the quarter, CMGI repurchased approximately 507,000 shares on the open market for about $6.0 million.  It has spent roughly $14 million of its $50 million share buyback plan. 

CMGI closed down 4% at $10.62 in regular trading, and shares are up 3% at $10.95 in after-hours trading.  The company’s market cap at the close was $520 million at the close.

Jon C. Ogg
March 10, 2008

The estimates for the supply chain management company and internet incubator from First Call are $0.21 EPS on $315 million in revenues, although we would caution that there are only two estimates listed.  Next quarter estimates are $0.12 EPS on $282.1 million in revenues. Estimates for fiscal July-2008 are $0.60 EPS on $1.14 billion in revenues.

We’ve only seen one target at $22.00 and that is an old one.  CMGI does have a significant short interest of $4.022 million shares as of the end of February, up slightly from the prior report.            

CMGI’s 52-week trading range is $9.66 to $26.00, although we would note that this is after a reverse-split adjustment so it isn’t quite as representative as it sounds.

The company did recently make a new acquisition just last month.

Last quarter, CMGI said it would focus on gross margins with expanded offerings and lowering of infrastructure costs.  Its goal was to reach 12% to 14% margins with cost cuts.  One other issue that was noted was that the company expects to continue to derive the vast majority of operating revenue from sales to a small number of key clients.

We routinely have CMGI screened for our "10 Stocks Under $10" newsletter, although there hasn’t been a call there on this one of late because of price constraints.  A perceived competitor is Safeguard Scientifics (NYSE: SFE), and that was just added to the newsletter list this weekend.

Jon C. Ogg
March 10, 2008

This acquisition was all cash and was listed as a total value of $24.5 million for OCS.  CMGI is paying out a net purchase price of $11 million for a minority interest and the repayment of debt that OCS currently holds.

CMGI said that this will be neutral to 2008 earnings and accretive thereafter.  In its integration of OCS into ModusLink, the company provides solutions that manage entitlements for software licenses, maintenance & support subscriptions, hardware features and rights-managed content.

Interestingly enough, this company was spun-off of Modus Media International back in 2001.  After CMGI acquired Modus Media international in 2004, CMGI took a minority interest in the company and it has been held as an @Ventures investment since. 

If you adjust for its reverse stock split, CMGI shares have seen a trading range over the last 52-weeks of $9.66 to $26.00.

Jon C. Ogg
February 20, 2008

The following data is based on the Trade Date of November 27 and the Settlement Date of November 30:

Sun Microsystems (NASDAQ:JAVA) had an adjusted 11.101 Million shares listed in its short interest after accounting for its reverse stock split.  What is interesting is that from mid-November that is a drop of some 30.5% in the short interest.  Maybe there is some love after all.

CMGI, Inc. (NASDAQ:CMGI) had an adjusted amount of 3.585 Million shares listed in its short interest after accounting for its recent reverse stock split.  This represents only a gain of 2.29% in the short interest from mid-November on an adjusted basis.

Sun Microsystems used to trade under the "SUNW" stock ticker, and even had the "JAVAD" ticker briefly, and CMGI traded briefly under the "CMGID" stock ticker while that was a pending reverse split.

Jon C. Ogg
December 12, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

We recently noted CMGI in our "10 Stocks Under $10" weekly subscriber newsletter with ten stocks that trade under 10-bucks.   Here are today’s earnings (with percentage changes year over year where applicable):

• Net revenue of $274.7, (-3.1%);
• Operating income of $9.1 million, (+80.9%);
• Income from continuing operations of $9.2 million, (-5.1%);
• Net income of $8.6 million, (-16.6%);
• Non-GAAP operating income of $17.1 million, (+66.4%);
• Diluted EPS from continuing operations of $0.19, compared to diluted earnings per share from continuing operations of $0.20 for the same period in the prior fiscal year;
• Diluted earnings per share including discontinued operations of $0.18, compared to diluted earnings per share including discontinued operations of $0.21 for the same period in the prior fiscal year.
• CMGI also ended with $261.2 million in cash and equivalents.

Joseph C. Lawler, Chairman, President & CEO of CMGI: “Revenue was expectedly lower compared with last year due to two specific previously announced client programs that were discontinued, however we are very pleased with the growth we are seeing from other client engagements. Excluding those discontinued programs, revenue grew by approximately 15% compared to the year ago period. Gross margin performance was higher than expected, driven by work mix, continuous improvement initiatives and higher volumes for certain client programs.”

CMGI continues to expect revenue of $1.10 billion to $1.15 billion and operating income to be approximately 2.0% to 2.5% of revenue in fiscal 2008, before any restructuring.  During the first quarter ended October 31, 2007, CMGI repurchased 568,000 shares (after giving effect to the recent reverse stock split) for aggregate consideration of $8.0 million, and pursuant to which the Company has authorized the repurchase of up to $50 million of common stock over an 18-month period.

We are going to look for "new contract awards" for an area we’d like to see here.  The company needs more contracts for longer periods of time and it needs to demonstrate that customer losses are either in-sourcing or are from natural attrition that would be expected at larger companies.  Otherwise we think that traders will get tired of hearing about customer defections.

Shares were initially down by about 0.5%, but now shares are up $0.01 in after-hours.  The stock closed at $10.33 today and the implied 52-week trading range to account for the reverse split is $9.66 to $26.00.

Jon C. Ogg
December 3, 2007

The company just recently began trading without the "D" as CMGID after its reverse stock split.  Wall St. is still cautious as the main operations of the company are in the ModusLink "supply chain" business. It doesn’t take a rocket scientist to be cautious about any aspect of logistics in a slowing economy when transports have remained quite negative. 

Stocks that go through reverse stock splits often have a contrary impact from what they intended: lower share prices, mainly from short sellers.  Investors seem inclined to stay on the sidelines a bit longer with CMGI, even if this is technically back under $1.00 based on the pre-reverse-split share prices. 

The reports earnings on December 3, and caution seems to dictate against jumping in ahead of what will be a tough quarter to please even cult stock investors.

The Editors

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