24/7 Wall St.

CMGI, Inc. (NASDAQ: CMGI) shares are trading up slightly in after-hours trading  after earnings.  The supply chain manager and internet incubator posted a 14.4% drop in revenues to $278.0 million, but gross margins improved to 14.0% compared with 12.5% in the prior year period.  It also posted a 23.7% drop in operating income of $8.6 million.  Its net income was down 22.5% to $0.58 EPS on $27.8 million.

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