SAN FRANCISCO -- Sounding like they'd just returned from Mr. Miyagi's Karate Kid Boot Camp for Net Executives, two of the best-known Internet incubators, CMGI (CMGI) and divine interVentures (DVIN) told investors they had found a deeper mission: focus.
It seems like that's almost bound to happen, though, when investors crane-kick your shares into the single-digit toilet. Both were trying to get out of those spots with their presentations Tuesday at the
Robertson Stephens Technology 2001 Conference
CMGI chieftain David Wetherell said his company had regained its focus on early-stage Internet companies with higher profit margin business models and was close to naming a new president.
"The takeaway," said Wetherell, "Is that CMGI is making tough decisions and is focused on effective business models." He said CMGI is looking at more enabling technologies, wireless and video compression companies and is trying to develop software licensing models in several of its business, including search engine
CMGI is trading at about $5.31 a share, well off its 52-week high of $151.50.
It's also trying to wean itself off the volatile revenue merry-go-round of advertising revenue, slicing that number to 22% of total revenue in the first quarter from 48% in the third quarter.
The company's new focus will include, among other things, infrastructure, professional services, e-business and commerce and interactivity. Wetherell stressed the company's cash position of $970 million and a slowing burn rate as examples of its progress in the area of focus and execution.
If to err is divine interVentures, then to regroup and dig in behind a single product must be simply Divine.
At his Tuesday presentation, Flip Filipowski, divine interVentures chairman and CEO, said his company is changing its name to just Divine and breaking free of the shackles of being known as an Internet incubator. The new focus of the newly named firm would be infrastructure software with a focus on B2B portals.
Okay, that doesn't sound anything like an Internet incubator but both the pony-tailed Filipowski and Chief Financial Officer Michael Cullinane still have a portfolio of about 50 companies marching under the Divine flag and must integrate them into the firm's mission.
Under better circumstances, it would've hoped to have taken many public by this point. But its own IPO in July 2000 came at what Filipowski called the "very tail end" of the good times and left the company without an exit strategy for many of the names in its portfolio.
The company, said Cullinane, was "perceived as kind of dead" because none of its companies made it to an IPO, but he said if the market were to turn around, there could be some opportunities for Divine companies to go public.
At this point, though, the company is refocusing its efforts on being a software company -- the roots of Filipowski's previous success -- and said it's well positioned in this time of tight capital to use its $240 million cash-hoard. Cullinane added that the company has targeted mid-2002 for profitability.
Still, the company's stock has sunk to $1.63 from a 52-week high of around $12 and barely 50 investors attended its presentation here. The name change and trying to distance itself from the ill-fated incubator label may fall a little short of reviving its shares.
Still, the company must, during a very difficult period, deliver on growth it predicts will take revenue to $220 million next year from last year's $40 million.