CMGI Announces Third Quarter Fiscal 2002 Financial Results and Financial Guidance.

Business/Technology Editors

ANDOVER, Mass.--(BUSINESS WIRE)--June 11, 2002

CMGI, Inc. (Nasdaq: CMGI), a leading diversified Internet operating and development company, today reported net revenue of $187.4 million for the third fiscal quarter ended April 30, 2002, an 11% decrease compared with the previous quarter.

CMGI reported a total operating loss of $133.7 million for the quarter ended April 30, 2002, compared to a total operating loss of $127.1 million for the quarter ended January 31, 2002, representing a 5% increase in operating loss quarter over quarter. Included in the third quarter total operating loss were charges related to amortization of intangible assets and stock-based compensation ("amortization charges") and depreciation totaling $78.0 million, long-lived asset impairment benefit of $0.5 million, and net restructuring charges of $1.7 million. Second quarter fiscal 2002 total operating loss included amortization charges and depreciation totaling $78.8 million, long-lived asset impairment charges of $11.3 million and a net restructuring benefit of $5.4 million.

Excluding the effects of charges related to in-process research and development, depreciation, amortization, long-lived asset impairment and restructuring, CMGI reported an operating loss ("pro forma operating loss"(1)) of $54.5 million or ($0.14) pro forma operating loss per share for the quarter ended April 30, 2002 versus a pro forma operating loss of $42.4 million or ($0.11) pro forma operating loss per share in the previous quarter ended January 31, 2002, representing a 29% increase.

CMGI reported a net loss of $125.2 million for the third quarter of fiscal 2002, compared to net income of $15.2 million for the second quarter ended January 31, 2002. The second quarter net income included an extraordinary gain of $133.1 million related to the extinguishment of CMGI's $220.0 million of notes payable to Compaq Computer Corporation ("Compaq"), recently acquired by Hewlett-Packard Company, in the second fiscal quarter. CMGI's net loss available to common stockholders was $125.2 million, or ($0.32) loss per share for the third quarter of fiscal 2002, compared to net income available to common stockholders of $78.3 million, or $0.20 earnings per share, for the previous quarter ended January 31, 2002. Net income available to common stockholders in the second quarter included a gain of $63.5 million on the repurchase by CMGI of the outstanding shares of its Series C Convertible Preferred Stock, which was recognized in CMGI's consolidated statement of stockholders' equity.

As of April 30, 2002, CMGI had a consolidated cash and cash equivalents balance of $329.0 million. In addition, CMGI had a consolidated short-term investments balance of $15.0 million as of April 30, 2002. Total cash and cash equivalents usage was $83.1 million during the third quarter versus $238.8 million in the previous quarter. The second quarter amount included $175.3 million used to repurchase CMGI's Series C Convertible Preferred Stock and to extinguish CMGI's notes payable to Compaq.

Financial Guidance

Net revenue for the fourth quarter of fiscal 2002 is expected to be approximately $144 million to $154 million. CMGI expects that its full year fiscal 2002 net revenue will be in excess of $744 million.

Pro forma operating loss is expected to be approximately $36 million to $41 million in the fourth quarter ending July 31, 2002. Pro forma operating loss for the full year of fiscal 2002 is expected to be between $201 million and $206 million.

As reaffirmed in its preliminary third quarter results issued May 21, 2002, CMGI believes that it will reach break-even on a pro forma operating basis in the first half of fiscal 2003. CMGI also believes that its eBusiness and Fulfillment segment, which includes the company's uBid and SalesLink subsidiaries, will reach break-even on a pro forma operating basis in the first half of fiscal 2003.

We expect that our consolidated cash and cash equivalents balance exiting fiscal 2002 will be approximately $288 million. In addition, our total cash and cash equivalents usage in the fourth quarter of fiscal 2002 is expected to be approximately $41 million.

"We are not satisfied with the performance of the business as a whole during the third quarter," said George McMillan, CMGI's Chief Executive Officer. "Despite our lower-than-expected operating performance during the quarter, we are very pleased with the progress of several specific businesses in this period, including AltaVista and Tallan, and we intend to build on these and other key subsidiaries as we refocus our strategic and financial resources for the future. We are also pleased with the improvement in our cash position as reflected in our expected cash balance exiting fiscal 2002. Our priorities remain the achievement of pro forma break-even and the strengthening of our revenue and asset base through both organic growth and acquisition, and improved sales and marketing processes."

Highlights - Corporate

During the third fiscal quarter, CMGI announced two important management transitions. Effective March 1, 2002, George McMillan, CMGI's previous chief financial officer and treasurer, was promoted to chief executive officer and was elected to the CMGI Board of Directors. As CEO, McMillan assumes leadership responsibility for the strategic direction and operations of the Company. David Wetherell will remain Chairman of CMGI's Board of Directors, providing counsel on key strategic initiatives and identifying new services and technologies consistent with the company's vision and mission.

In addition, Thomas Oberdorf, was appointed chief financial officer and treasurer, replacing George McMillan. Oberdorf, a seasoned financial executive with more than 20 years experience in both domestic and international business environments, joins CMGI from BeMusic Direct, a billion-dollar division of Bertlesmann AG, where he served as CFO and Senior Vice President.

Highlights - Operating Businesses and Venture Capital

Recent significant accomplishments of CMGI's principal operating businesses, by segment, and its venture capital affiliate, @Ventures, include:

eBusiness and Fulfillment

uBid

-- On March 27, uBid announced the opening of its new refurbishment center, providing a fully integrated logistics solution for handling the return, repair, refurbishment and re-marketing of technology products. The new center, located in SalesLink's state-of-the-art Memphis, Tennessee warehouse, provides a full-service refurbishment and re-marketing solution that aids manufacturers and retailers in maximizing asset recovery on product returns.

-- uBid and The Excite Network (iWon and Excite) recently announced an agreement naming uBid as the exclusive provider of online auctions for Excite and iWon, integrating uBid's item listings and categories into the popular Excite and iWon Auctions destinations.

-- uBid also recently announced a number of important senior management appointments. In May, uBid named Christian Feuer, president and chief executive officer, and Robert Tomlinson Jr. chief financial officer. Feuer joins uBid from Spiegel Catalog, Inc., a subsidiary of the Spiegel Group, where he served as senior vice president of marketing and advertising production. Tomlinson was previously chief financial officer at Forbes.com, Inc. In April, uBid named Norman Hullinger, formerly with Yahoo! Auctions, to the newly created position of senior vice president of operations. In this role, Hullinger assumes management responsibility for all of the company's operations functions, including warehousing, distribution infrastructure and `back-end' transactional activities, as well as oversight of uBid's call center and customer care teams.

Enterprise Software and Services

AltaVista

-- AltaVista recently launched important freshness and relevancy initiatives, crawling key areas of the Internet four times per day and increasing relevancy by 40%.

-- AltaVista signed several new Web Marketing Services accounts, including WalMart.com and Half.com (a subsidiary of eBay), in the third quarter. The AltaVista Web Marketing Services products and related reseller program were also launched in Germany, Italy, France, the United Kingdom and Australia, adding international customers and resellers including eBay, Trellian, NetBooster, eProfessional and Decide Interactive.

-- AltaVista also signed several major brand advertisers in the third quarter, including Eli Lilly, Bank One, Register.com, Microsoft, LandRover and Opodo.

-- AltaVista signed a distribution deal in the third quarter with Tiscali, enabling the company to offer Tiscali users AltaVista's Internet search results across 12 European markets.

-- AltaVista updated and released AltaVista Enterprise Search 2.0 on all supported platforms (NT, Solaris, Tru64, Linux, HP-UX, AIX).

-- Since the close of the quarter, AltaVista also executed an agreement pursuant to which Overture Services, Inc. will distribute its 'Pay-For-Performance' search listings on AltaVista's North American sites. The companies signed similar agreements in both Germany and the U.K. during the third quarter. Under the terms of these agreements, AltaVista and Overture will share the revenue resulting from user click-throughs to Overture's customers' Web sites.

Engage

-- Engage formed a relationship with McKinney & Silver, a Raleigh, NC-based advertising agency, during the third quarter. The agency has agreed to purchase the Engage for Agencies solution to custom develop an advertising distribution system for Audi USA, one of the agency's premier automotive clients.

-- Also in the third quarter, Engage announced that the Richmond Times Dispatch, a Media General regional newspaper serving Richmond, Virginia and the surrounding areas, is an early adopter of ContentServer 7.0. ContentServer 7.0, the core platform technology of Engage's packaged solutions, including Engage for Retail, Engage for Newspapers, Engage for Corporations and Engage for Agencies, will be generally available in fiscal Q4.

-- Internet Thailand, Thailand's first commercial Internet service provider, purchased Engage's ProfileServer module and registration library to serve unique ads and content based on profiles.

-- New customer relationships for Engage's Internet advertising business signed during the quarter included MyWeather, a leading provider of standard and customized weather-related digital services. MyWeather deployed Engage's ad management solutions for personalized online advertisement delivery based on unique information.

-- E! Networks, one of the world's most popular entertainment web sites, is currently beta testing AdManager 6.0, due for general availability in late June 2002. E! Networks, an Engage customer for more than five years, is in the process of integrating AdManager 6.0 with Engage ProfileServer technology.

Equilibrium

-- During the third quarter, Equilibrium added 52 new integration partners to its North American channel program and launched its Gold PartnerNet extranet. Equilibrium also announced MediaRich integration with Microsoft(R) Commerce Server 2002 and Content Management Server to meet the imaging needs of enterprise customers.

-- Equilibrium MediaRich(TM) Enterprise Image Server was selected by Microsoft to dynamically create custom sales prototypes for its .NET initiative. Other recent wins include Bluefly, a leading Internet retailer of designer fashions, Bass(R) footwear, and Izod(R). New OEM Partners included Kinetic, Intersight and Pageflex.

Tallan

-- During the third quarter, Tallan signed 5 new clients including Avery Dennison InfoChain Express. Tallan also signed several additional projects at existing clients including Fleet Credit Card Services, Ingram Micro and uBid.

-- Tallan announced three new service offerings during the third quarter: Infrastructure Assessment, IT Portfolio Management and System Usability and Testing. These new offerings add to Tallan's suite of project-specific enterprise services, designed to help companies assess existing networks and business needs, aid in the prioritization of project investments, and enable organizations to meet the primary needs and goals of the end-user, while maintaining important business objectives.

Yesmail

-- Yesmail signed three new email retention clients during the third quarter.

-- Yesmail also launched its B2B acquisition network of 8 million business contacts. Yesmail's B2B Network has responded to customer demands for targetable and responsive names by including key demographic data.

Managed Application Services 

NaviSite

-- NaviSite added several new "Always On Managed Hosting" customer engagements during the third quarter including the Academy of Arts College, Cap-Com, Public Storage and Yesmail.

-- In April 2002, NaviSite announced the divestiture of its streaming media business to Streaming Media Corporation.

-- During the third quarter, NaviSite formally entered into a Strategic Service Provider Alliance Agreement with Compaq to design and promote NaviSite managed solutions, to generate new strategic business opportunities for both companies, and to capitalize on joint regional sales efforts.

Venture Capital

@Ventures

-- @Ventures investments made during the quarter totaled $3.4 million, consisting of a follow-on investment in Avamar Technologies, Inc.

About CMGI and @Ventures

CMGI, Inc. (Nasdaq: CMGI), a leading diversified Internet operating and development company, is comprised of established and emerging companies, including both CMGI operating businesses and investments made through its venture capital affiliate, @Ventures. CMGI companies span a range of vertical market segments including e-business and fulfillment; enterprise software and services; and managed application services.

CMGI's majority-owned operating companies include Engage (Nasdaq: ENGA), NaviSite (Nasdaq: NAVI), AltaVista, Equilibrium, ProvisionSoft (formerly CMGion), SalesLink, Tallan, uBid and Yesmail. @Ventures has ownership interests in more than 30 companies, with a focus on identifying, investing in and developing emerging technology companies and eBusinesses.

CMGI's corporate headquarters is located at 100 Brickstone Square, Andover, MA 01810. @Ventures has offices there, as well as at 3000 Alpine Road, Menlo Park, CA 94028. For additional information, see http://www.cmgi.com and http://www.ventures.com.

(1) The pro forma operating results are not a recognized measure for financial statement presentation under United States generally accepted accounting principles (U.S. GAAP). Non-U.S. GAAP earnings measures do not have any standardized definition and are therefore unlikely to be comparable to similar measures presented by other reporting companies. This pro forma measure is provided to assist readers in evaluating CMGI's operating performance and each of the items listed (in-process research and development, depreciation, amortization of assets and stock-based compensation, long-lived asset impairment and restructuring) were excluded because they were considered to be of a non-operational nature. Readers are encouraged to consider this pro forma measure in conjunction with CMGI's U.S. GAAP results.

This release contains forward-looking statements which address a variety of subjects including, for example, the expected financial results of CMGI and its operating companies for the remainder of fiscal 2002 and beyond, and the expected ability of CMGI to reduce its cash usage, preserve its capital resources, grow its businesses and reach profitability. All statements other than statements of historical fact, including without limitation, those with respect to CMGI's goals, plans and strategies set forth herein are forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: CMGI's success is dependent upon its ability to integrate its operating companies in accordance with its business strategy; CMGI's success, including its ability to decrease its cash burn rate, improve its cash position, grow its businesses and revenues and reach profitability, depends on its ability to execute on its business strategy and the continued and increased demand for and market acceptance of CMGI's and its operating companies' products, services, web sites and the Internet in general; CMGI may experience difficulties integrating technologies, operations and personnel in accordance with its business strategy; and increased competition and technological changes in the markets in which CMGI competes. For a detailed discussion of cautionary statements that may affect CMGI's future results of operations and financial results, please refer to CMGI's filings with the Securities and Exchange Commission, including CMGI's most recent Quarterly Report on Form 10-Q. Forward-looking statements represent management's current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements made by us.

                  CMGI, Inc. and Subsidiaries
             Consolidated Statements of Operations
           (In thousands, except per share amounts)

                          (Unaudited)

                      Three months ended          Nine months ended
                 April 30, Jan. 31,   April 30,  April 30,  April 30,
                   2002      2002       2001       2002       2001

Net revenue     $ 187,385 $ 211,217 $   290,313 $ 599,842 $   987,245

Operating
 expenses
 (benefits):
 Cost of revenue  169,444   178,759     261,224   530,299     900,749
 Research and
  development      13,460    14,228      35,621    46,483     133,383
 In-process
  research and
  development           -         -           -         -       1,462
 Selling           34,987    36,151      82,691   113,978     333,334
 General and
  administrative   38,429    39,537      64,999   122,395     224,491
 Amortization of
  intangible
  assets and
  stock-based
  compensation     63,543    63,741     247,439   193,209   1,379,456
 Impairment of
  long-lived
  assets             (548)   11,279     609,491    47,353   2,678,063
 Restructuring      1,721    (5,378)     18,526    13,951     127,398
   Total
    operating
    expenses      321,036   338,317   1,319,991 1,067,668   5,778,336

Operating loss   (133,651) (127,100) (1,029,678) (467,826) (4,791,091)

Other income
 (deductions):
 Gains (losses)
  on issuance
  of stock by
  subsidiaries
  and affiliates,
  net                   -         -        (432)        -     122,438
 Other gains
  (losses), net    (7,441)  (18,063)    (48,155)  (34,125)     72,271
 Minority
  interest          5,683    14,653      53,564    37,594     393,323
 Equity in losses
  of affiliates    (2,003)   (1,144)     (9,948)  (15,396)    (39,376)
 Interest income
  (expense), net   (2,800)   13,782       5,880     9,444       4,798
   Total           (6,561)    9,228         909    (2,483)    553,454

 Loss before
  income taxes
  and
  extraordinary
  item           (140,212) (117,872) (1,028,769) (470,309) (4,237,637)
 Income tax
  benefit         (15,000)        -     (42,130)   (2,421)    (76,760)
 Loss before
  extraordinary
  item           (125,212) (117,872)   (986,639) (467,888) (4,160,877)
 Extraordinary
  item:
   Gain on
   extinguishment
   of notes
   payable to
   Compaq
   Computer
   Corporation          -   133,075           -   133,075           -

 Net income
 (loss)          (125,212)   15,203    (986,639) (334,813) (4,160,877)
 Preferred stock
  accretion             -      (411)     (1,829)   (2,301)     (5,609)
 Gain on
  repurchase of
  Series C
  Convertible
  Preferred Stock       -    63,505           -    63,505           -

 Net income (loss)
  available to
  common
  stockholders  $(125,212)$  78,297 $  (988,468)$(273,609)$(4,166,486)

Basic and diluted
 loss per share
 available to
 common
 stockholders:
  Loss available
   to common
   stockholders  $  (0.32) $  (0.14)$     (2.87)$   (1.08)$    (12.82)
 Gain on
  extinguishment
  of notes
  payable to
  Compaq Computer
  Corporation           -      0.34           -      0.35           -

 Net income (loss)
  available to
  common
  stockholders   $  (0.32)$    0.20 $     (2.87)$   (0.73)$    (12.82)

 Shares used in
  computing basic
  and diluted
  loss per share  392,025   383,845     344,186   375,603     324,999



                      CMGI, Inc. and Subsidiaries
                 Consolidated Statements of Operations
               (In thousands, except per share amounts)

                              (Unaudited)

                   Three months ended             Nine months ended
             April 30,   Jan. 31,    April 30,  April 30,    April 30,
               2002       2002         2001       2002         2001

Net revenue:

 Enterprise
  Software
  and
  Services  $  36,522  $  40,477  $    88,612  $ 122,674  $   350,236
 eBusiness
  and
  Fulfillment 140,582    154,193      166,197    427,473      528,524
 Managed
  Application
  Services
  and Web
  Hosting      10,070     13,035       30,932     43,159       92,736
 Portals          211      3,512        4,572      6,536       15,749
 Other           --         --           --         --           --
            $ 187,385  $ 211,217  $   290,313  $ 599,842  $   987,245


Operating
 income
 (loss):

 Enterprise
  Software
  and
  Services  $ (68,279) $ (50,324) $  (833,802) $(223,201) $(4,097,664)
 eBusiness
  and
  Fulfillment (53,536)   (41,036)     (55,032)  (135,315)    (134,629)
 Managed
  Application
  Services
  and Web
  Hosting      (1,373)   (22,093)     (89,588)   (63,562)    (308,840)
 Portals          (95)     1,500      (26,911)    (6,391)    (179,750)
 Other        (10,368)   (15,147)     (24,345)   (39,357)     (70,208)
            $(133,651) $(127,100) $(1,029,678) $(467,826) $(4,791,091)


Pro forma
 operating
 income
 (loss):

 Enterprise
  Software
  and
  Services  $ (22,598) $ (13,693) $   (55,720) $ (63,463) $  (230,936)
 eBusiness
  and
  Fulfillment (20,690)    (8,611)      (3,610)   (37,424)     (10,008)
 Managed
  Application
  Services
  and Web
  Hosting      (3,032)   (10,127)     (47,648)   (34,899)    (188,170)
 Portals          353        913       (2,155)        60      (39,996)
 Other         (8,497)   (10,882)     (22,557)   (29,246)     (65,473)
            $ (54,464) $ (42,400) $  (131,690) $(164,972) $  (534,583)


Note: Pro forma operating income (loss) represents total operating
loss, excluding net charges related to in process research and
development, depreciation, amortization of intangible assets and
stock-based compensation, long-lived asset impairment and
restructuring.