CMGi Reports First Quarter Earnings of $1.67 Per Share; Revenues Increase 42% From Previous Quarter.

ANDOVER, Mass.--(BUSINESS WIRE)--Dec. 15, 1998--CMG Information Services, Inc. (NASDAQ:CMGI) today reported net revenues of $40 million for its first quarter ended October 31, 1998, a 42% sequential increase in quarterly revenues. CMGi reported net income of $38.6 million or $1.67 basic income per share for the quarter, compared to net income of $31.4 million or $1.38 basic income per share for the previous quarter ended July 31, 1998. First quarter fiscal 1999 results included pre-tax gains of $19.1 million on the sale of the Company's investment in Sage Enterprises (Planet All), $23.2 million on the sale of the Company's investment in Reel.com, $19.2 million on issuance of stock by Lycos, and $24.1 million on issuance of stock by GeoCities. Fourth quarter results included a $54.0 million pre-tax gain on the sale of Lycos stock and a $24.3 million gain on issuance of stock by Lycos.

Beginning in the second quarter of fiscal 1998, when the Company's ownership in Lycos was reduced below 50%, CMGi began accounting for its investment in Lycos under the equity method, rather than the consolidation method, and as such, CMGi's consolidated revenues and operating expenses no longer include Lycos. On a comparable basis, CMGi's first quarter fiscal 1999 revenues of $40 million represent an increase of 153% over prior year first quarter results, excluding Lycos revenues of $9.3 million included in Q1 fiscal 1998 results. Similarly, excluding Lycos operating expenses of $9.7 million included in CMGi's prior year first quarter results, first quarter fiscal 1999 operating expenses of $59.9 million, reflect a 22% increase from the fourth quarter of fiscal 1998 and a 117% increase from last year's first quarter.

During the Company's first fiscal quarter, CMG@Ventures II completed the sales of Planet All to Amazon.com and Reel.com to Hollywood Entertainment, the Company invested in Hollywood Entertainment and Magnitude Network, and CMG@Ventures III invested in Raging Bull, Asimba and Virtual Ink. Also during the first quarter, GeoCities successfully completed its initial public offering at a price of $17 per share. CMG@Ventures currently holds 8.8 million shares of GeoCities common stock (of which approximately 6.8 million shares are attributable to CMGi), which it acquired at an average cost of $0.67 per share. Recently, CMG@Ventures III secured a minority investment in Ancestry.com.

Commenting on the Company's performance, CEO David Wetherell said, "Significant progress was made during the first quarter, including the substantial gains CMGi realized from the sales of Reel.com and Planet All and the successful GeoCities IPO. Further, we're extremely pleased with the progress of the Company's Internet strategy, including the progress we've recently seen in product and business development, partnering and sales, and the additions of Hollywood Entertainment, Magnitude Network, Raging Bull, Asimba, Virtual Ink, and Ancestry.com. With the addition of these new Internet investments to its portfolio during fiscal 1999, CMGi now has investments in over 30 businesses."

Operating Segments

The Company reports three operating segments: Investment and Development, Fulfillment Services, and Lists and Database Services.

The Investment and Development segment results reflect the consolidated performance of majority-owned Internet companies, which during the first quarter of fiscal year 1999 include Blaxxun, Planet Direct, ADSmart, NaviSite, NaviNet, The Password, Vicinity, and Engage/Accipiter. The Investment and Development segment reported revenues of $4,912,000 in the current quarter, compared with $4,170,000 in the previous quarter ended July 31, 1998. The operating loss was $19,924,000 in the quarter just ended versus a loss of $18,149,000 for the quarter ended July 31, 1998.

CMGi's portion of the net operating performances of Lycos, GeoCities, ThingWorld.com (formerly Parable), Silknet, Speech Machines, Mother Nature, and Magnitude Network is reflected in equity in losses of affiliates during the first quarter of fiscal 1999. Equity in losses of affiliates was $2,589,000 for the current quarter, compared with $3,397,000 for the quarter ended July 31, 1998. CMGi's investments in Chemdex, KOZ, Softway Systems, Critical Path, and Tickets Live are carried at cost. CMGi's investments in Hollywood Entertainment, Amazon.com, Open Market and Red Brick are accounted for as available-for-sale securities, at market value.

In the Fulfillment Services segment, revenues increased 49% to $32,493,000 in the first quarter of fiscal 1999 from $21,776,000 in the fourth quarter of fiscal year 1998. This successful growth rate reflects the acquisitions of InSolutions and On-Demand Solutions, and continued success in both attracting new customers and increasing the volume of turnkey business from existing customers. This milestone represents a new quarterly revenue record for this segment, its sixth consecutive sequential quarterly revenue increase and a 170% increase over last year's first fiscal quarter. The fulfillment segment reported operating income of $257,000 in the quarter, compared with operating loss of $2,313,000 in the fourth quarter of fiscal year 1998. Fourth quarter results included a $2,487,000 charge to cost of sales to correct prior quarter's understatements of cost of sales by SalesLink's subsidiary company, Pacific Link. Had such corrections been reflected in the periods in which they occurred, fulfillment quarterly operating profits for the fourth quarter of fiscal 1998 would have been $174,000. Fulfillment segment results for the current quarter ended October 31, 1998 and the previous quarter ended July 31, 1998 include $669,000, and $384,000, respectively, of goodwill amortization charges related to the acquisitions. Additionally, current quarter results include incremental costs associated with relocating SalesLink's Boston operations to a more cost efficient facility.

The Lists and Database Services segment reported sales of $2,600,000 in the quarter just ended, representing an increase of $443,000 compared to $2,157,000 in the fourth quarter of fiscal year 1998. Sales were higher, primarily reflecting the seasonality of the educational publishing industry. The segment posted an operating loss for the quarter of $212,000 versus a loss of $439,000 for the fourth quarter ended July 31, 1998; primarily reflecting the impact of increased sales, partially offset by increased marketing costs associated with CMG Direct's CMGexpress.net "opt-in" e-mail list service.

Investment and Development Highlights

Since September 1998, CMG@Ventures III, LLC has acquired minority ownership interests in four Internet companies, including Raging Bull, Asimba, Virtual Ink, and Ancestry.com. Raging Bull is a fast-growing financial Web message board service that offers the ability to filter content and tailor personally relevant financial information to meet users' needs. The Raging Bull website features thousands of searchable message boards on dozens of industries and market segments-from biotechnology to telecommunications. Asimba is creating a content rich, personalized, online community for the competitive and recreational sports market. Virtual Ink is a newly launched company focused on the development of Digital Meeting Assistant(TM) (DMA) technologies. Through its DMA products, Virtual Ink empowers companies to manage and share information in real-time, resulting in more effective, comprehensive communications throughout an organization. In early 1999, Virtual Ink expects to launch its flagship product, a portable Digital Meeting Assistant that captures thoughts, ideas, and instructions directly into PC applications, or for real-time display across the Internet. Ancestry.com features the Web's largest and fastest-growing collection of searchable genealogy data. It offers nearly 700 fully searchable databases containing information on more than 100 million individuals, free daily articles, extensive "how-to" lessons, a secure online genealogy mall, and links to thousands of additional resources on the Internet.

In September 1998, CMGi announced the launch of NaviNet, the first national provider of switch bypass-based wholesale dial-up networking. The NaviNet Technology Platform aggregates multiple calling areas into megaPOPs, deploys advanced switch bypass technology to eliminate busy signals due to port congestion and relies on private transit Internet connectivity to bypass congested public peering points. This creates a highly reliable, low cost network with the industry's highest call completion rates. NaviNet's technology will allow Internet service providers to increase capacity in current markets and quickly expand to new markets, while significantly lowering their costs per subscriber. In December 1998, NaviNet announced the appointment of T.C. Browne as Chief Executive Officer. Browne brings over 20 years of high-technology experience with a focus on Internet, wireless and communications technologies. Prior to NaviNet, Browne served as Senior Vice President and General Manager, Internetwork Technologies Group at GTE Internetworking (formerly BBN Corporation).

In November 1998, NaviSite announced a comprehensive lineup of application solutions, called SiteHarbor(TM) ProApps Services, for application developers and customers conducting business on the Web. SiteHarbor ProApps services consist of four components: application hosting, proactive application management, application rental and integration services. The company's strategy centers on the six critical application elements of successful online business: advertising, e-commerce, content management, streaming media, statistics collection and personalization. With this introduction, companies can now cost-effectively outsource the complex online business applications and databases that power their business-critical Web sites to NaviSite. Also in November, NaviSite was selected by Compaq to provide high-end Web hosting services for the "Ask Alta Vista(TM) a Question" portion of its Internet search service. In December 1998, NaviSite announced that the company has expanded its European operations through an agreement with Planet Online Limited in Leeds, U.K., which is home to Europe's largest Web server farm. NaviSite's European data center location will put the content of multinational companies' closer to their customers, enabling faster response times and superior Web site and application performance.

On September 28, 1998 Planet Direct announced that its personal Web service will be added to Compaq's "Instant Internet" easy access to Web services. Compaq PCs with the new Easy Access Internet Keyboard allow the user to select the co-branded Planet Direct personalized Web service as their default home page every time they access the Internet. In November, 1998 Planet Direct announced the addition of eight new content partners including CareGuide, Deja News, Habitat for Humanity International, Insurance News Network, Magnitude Network, OnHealth.com, Rolling Stone Network and Sweepstakes Advantage. Also in November, Planet Direct entered into a strategic partnership agreement with up2 technologies inc., a subsidiary of Teleglobe Inc. (NYSE:TGO). up2 technologies will utilize Planet Direct as the online content service for its new portal site. up2 technologies expects a consumer launch in early 1999, building upon Planet Direct's offering of premium content and community tools. Planet Direct currently has more than 860,000 registered members and is provided to and co-branded by more than 420 Internet service providers.

During the quarter Engage announced a strategic alliance with RelevantKnowledge to develop a co-branded service that will incorporate Engage's Precision Profiling technology with RelevantKnowledge's Web Report. The combination will provide comprehensive profile information to Web publishers while maintaining user privacy. Engage's technology anonymously segments users into 800 interest categories which, in turn, complements RelevantKnowledge's intelligence on the demographics, lifestyles and purchasing choices of Web users. Precision Profiling will also be integrated with Microsoft's Site Server 3.0 in an arrangement announced on October 9th. The initial software extension will provide an advanced level of personalization for Microsoft Site Server 3.0 and allow customers to use behavior-based visitor profiles from Engage Knowledge, Engage's Web-wide database containing over 30 million anonymous user profiles. Further integration efforts are planned to enable Site Server customers to use Engage Precision Profiling technology to build Site Server local behavior profiles combined with the global profiles from Knowledge. Also during the quarter, Engage announced that four entertainment Web sites, including Carlton Online, E! Online, Sony Online Entertainment and USA Networks have licensed Engage's AdManager 4.0 for online advertising and marketing solutions.

Lycos (NASDAQ:LCOS) reported revenues of $24.8 million for its first quarter ended October 31, 1998, representing an increase of 30% over the previous quarter ended July 31, 1998 and an increase of 166% over the first quarter of the prior year. During the quarter, Lycos unveiled the Lycos Network, which combines diversity of programming with mass audience reach. With its unduplicated reach of 44.5% of Web users or 27.8 million unique visitors in October, the Lycos Network is the Web's second most visited hub or portal. During the quarter Lycos acquired WhoWhere?, which offers a line of Web-based applications, including its leading directory services, popular e-mail service and Angelfire, a leading Web community. Lycos also signed a definitive agreement to acquire Wired Digital, with its family of Web products and services, including HotBot, HotWired and Wired News. Lycos also signed a significant agreement with Fleet Bank, which, among other initiatives, allows consumers to apply for a no annual fee credit card bearing the Lycos brand. In December 1998, Lycos opened the Lycos Store, a virtual department store carrying thousands of name-brand products that shoppers can purchase easily and directly from Lycos in a secure shopping environment.

On August 11, 1998, GeoCities (NASDAQ:GCTY) successfully completed an initial public offering of 4.75 million shares of common stock at $17 per share on the Nasdaq National Market. CMGi's @Ventures subsidiaries made their first investment in January 1996, and have invested a total of $5.9 million in the company. After the IPO, CMGi's @Ventures subsidiaries owned approximately 28 percent of GeoCities' outstanding shares. GeoCities reported revenues of $5.3 million for its third quarter ended September 30, 1998, representing an increase of 57% over second quarter revenues and an increase of 316% over the comparable period last year. On October 15, 1998, GeoCities announced the availability of GeoBuilder, an easy-to-use and intuitive website builder designed for use by consumers. The Web editor was developed specifically for first time users, bringing the functionality and ease of use of a desktop publishing program to website publishing, and requiring no knowledge of HTML. In December, GeoCities completed the acquisition of Starseed, Inc., known as WebRing. With 66,000 separate affinity-based rings (communities created by linking websites of common interests) and over 900,000 members, WebRing complements GeoCities' strategy to continuously seek ways to extend the features and functionality of its site in order to promote membership, visitation and commerce. Also in December, GeoCities announced a new partnership with iSyndicate to provide GeoCities' members a diverse offering of free, professionally developed content for incorporation into GeoCities member-built websites, with availability beginning early next year. Recently, GeoCities announced that it had surpassed 3 million active member mark, and that its members had published more than 27 million pages of Internet content.

On December 7, ThingWorld.com (formerly Parable), and Microsoft Corp. announced a powerful branding solution for Internet content providers using Microsoft(R) Windows(R) Media Technologies and ThingWorld.com's Things. This new solution, called Streaming Media Things(TM), adds streaming audio and video to ThingWorld.com Things, allowing users to secure and extend their brand and capitalize on their audio and video assets over the Internet. This past quarter saw the launching of Curious George Things, New England Patriots Digital Collectibles(TM) and Monopoly Things, the partnering with the New England Patriots and Tripod to create an online community for Patriots fans, and the announcement of ThingWorld.com's partnership with its first professional sports league - Major League Soccer. Recently, ThingWorld.com announced a partnership with Lycos and Comedy Central, giving Lycos exclusive rights to distribute Comedy Central Things, announced music industry partnerships with UltraStar and Electric Artists, and announced a strategic partnership with GeoCities to license ThingWorld.com's technology for use by GeoCities members.

CMG Information Services, Inc. is a leading provider of direct marketing services, investing in and integrating advanced Internet, interactive media and database technologies.

Forward looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Act. Investors are cautioned that actual results could differ materially from those anticipated by such statements and are advised to consult CMGi's current SEC filings for additional information concerning risk factors that affect the Company's business.

-0-

           CMG Information Services, Inc. And Subsidiaries
                Consolidated Statements of Operations
               (In thousands except per share amounts)

                              (Unaudited)

                                             Three months ended
                                     October 31,  July 31,  October 31,
                                        1998        1998        1997

Net revenues                         $ 40,005    $ 28,103    $ 25,135

Operating expenses:
   Cost of revenues                    37,108      29,176      15,259
   Research and
     development                        5,491       4,928       6,174
   In-process research
     and development                        -         200           -
   Selling                              8,979       7,575      11,040
   General and
     administrative                     8,306       7,125       4,901
         Total operating expenses      59,884      49,004      37,374

Operating loss                        (19,879)    (20,901)    (12,239)

Other income (deductions):
   Gain on sale of data
     warehouse product rights               -           -       8,437
   Gain on sale of
     Lycos, Inc. common stock           2,018      53,978       6,324
   Gain on sale of
     available-for-sale securities          -           -       4,174
   Gain (loss) on stock
     issuance by Lycos, Inc.           19,182      24,305         (94)
   Gain on stock issuance
     by GeoCities                      24,132           -           -
   Gain on sale of investment
     in Sage Enterprises, Inc.         19,057           -           -
   Gain on sale of investment
     in Reel.com, Inc.                 23,158           -           -
   Minority interest                      101           -         (28)
   Equity in losses
     of affiliates                     (2,589)     (3,397)     (1,529)
   Interest income                        559         714         843
   Interest expense                    (1,068)     (1,035)       (770)
      Total                            84,550      74,565      17,357

Income before income taxes             64,671      53,664       5,118
Income tax  expense                    26,118      22,268       2,433
   Net income                        $ 38,553    $ 31,396    $  2,685

Net income per share:
     Basic                           $   1.67    $   1.38    $   0.14
     Diluted                         $   1.54    $   1.27    $   0.12

Shares used in computing net income per share:
     Basic                             23,041      22,794      19,358
     Diluted                           24,966      24,660      20,633



           CMG Information Services, Inc. And Subsidiaries
                Condensed Consolidated Balance Sheets
                            (In thousands)

                             (Unaudited)

                                           October 31, July 31,
                                              1998       1998
Assets
   Cash and cash equivalents               $  6,639   $ 61,537
   Available-for-sale securities             92,287      5,764
   Accounts receivable, net                  29,222     23,960
   Investments in affiliates                115,057     66,187
   Goodwill, net                             48,606     49,682
   Other assets                              34,600     30,330
         Total assets                      $326,411   $237,460

Liabilities and stockholders' equity
   Notes payable and long-term debt        $ 42,767   $ 45,623
   Accounts payable and accrued expenses     39,579     31,795
   Accrued and deferred income taxes         37,243     20,613
   Deferred revenues                         10,292      4,932
   Other liabilities                          5,383      5,667
   Minority interest                         33,402     11,045
   Stockholders' equity                     157,745    117,785
         Total liabilities and
          stockholders' equity             $326,411   $237,460