In Wetherell they trust -- pretty much.
shareholders, stung by the stock's drop following last month's announcement of the deal to create
USA/Lycos Interactive Networks
, appear to be supportive of the recent monkey-wrenching moves of
chairman David Wetherell.
But although investors approve of Wetherell's actions, shareholders reached by
aren't prepared yet to line up behind the now-former Lycos board member and vote the current deal down.
Lycos stock has risen 31% in the two days since Wetherell announced he was resigning from the Lycos board to seek alternatives to Lycos' proposed merger with
and pieces of
. CMGI is the portal company's largest shareholder.
"I'm quite a fan of Mr. Wetherell," says Michael Goldston, president of
Cambridge Equity Advisors
, a money management firm in Nashville, Tenn. "If he doesn't think the value is maximized by doing the acquisition the way it was, then I have to say I kind of agree with him." Goldston's firm holds shares in both CMGI and Lycos.
But it is not clear if there are other buyers interested in Lycos, or at what price a deal might be concluded. The recent run-up in the stock, acknowledges Goldston, could make it harder to do another deal. "The price is certainly much less attractive
to a potential buyer than it was a week ago," Goldston says. "Every dollar it goes up makes it tougher to get a deal to do."
Mike Hershey, president of
, says he isn't sure that Wetherell can find a better deal for Lycos. "As for shopping this stock around, I don't get that," Hershey said. "Hasn't it already been shopped?" Landis Associates, manager of the
Henlopen Fund, has sold half its stakes in both Lycos and CMGI on the stocks' recent price increases, Hershey says.
Despite this uncertainty about what alternatives are available to Lycos, shareholders are generally supportive. Wetherell's recent actions are "all positive as far as we're concerned," says Fritz Linkner, research analyst at
Husic Capital Management
, another Lycos shareholder. "David wants to make sure that Lycos has considered all the possibilities. Maybe USA isn't the only option out there."
Wetherell the biggest shareholder, he's the guy probably with the most information and the strongest interest in maximizing value for Lycos," says another Lycos shareholder, speaking anonymously.
Goldston and Linkner say they haven't yet decided whether they will vote for or against the deal as it is currently structured. Other than continuing with the current, or improved merger plans, the options faced by Lycos are to find a deal with another buyer, stay independent or get absorbed by CMGI, an option Wetherell mentioned to the
The Wall Street Journal
"It is kind of dramatic coming out and making comments like that," says Goldston. "Basically, what I think he's trying to do is jawbone the price of the stock up, and it seems to be working."
But an analyst at a hedge fund with a stake in Lycos, speaking on condition of anonymity, expressed doubts about a CMGI acquisition of Lycos. "I'd be very surprised if they decided to issue shares for Lycos. I think the CMGI shareholders would be upset," the analyst said. "It would be shifting away from the focus of CMGI, which is being an incubator for these Internet companies."
Linkner, whose firm has shares in CMGI as well as in Lycos, says he hasn't yet assessed the effect a possible Lycos acquisition would have on CMGI. He is, though, clearly heartened by Wetherell's recent actions.