CMGI Chief Is Stepping Down
CMGI Inc., the Internet company that bought more than two dozen Web businesses in four years but lost $5.5 billion last year, said David Wetherell is stepping down as chief executive.
CMGI’s strategy was to reap gains by selling shares of its businesses to the public. That plan stalled as investor demand for initial stock offerings and money-losing Web businesses cooled.
“A sacrifice was needed,” said David Simons, managing director at Digital Video Investments, an institutional research firm. “The numbers speak for themselves. He kept promising a big turnaround and that never happened.”
Wetherell, 47, will continue as chairman of the Andover, Mass., company and will be replaced by Chief Financial Officer George McMillan, 54. The change is effective March 1.
CMGI stock tumbled 70% in the last year, leaving it with a market value of about $537 million compared with $26.5 billion in December 1999.
While CMGI’s stock was soaring, Wetherell bought companies ranging from Web search service AltaVista Co. to Internet service provider 1stUp.com. The decline in CMGI’s shares reduced Wetherell’s holdings to about $36 million from more than $3 billion at the end of 1999.
Wetherell “figured now was the right time [as] his best use as a visionary and mine as a financial guy turned out to be a great marriage,” McMillan said Tuesday. He said that Wetherell wasn’t asked to step down by the board.
McMillan, at CMGI since July, said part of the company’s challenge is to become profitable, before some costs, by January 2003 to convince money managers to invest in the stock.
“We have nine companies here which we believe offer building blocks for the long term,” McMillan said. “Our focus is to run them, not churn them.”
The firm might acquire additional businesses or sell some units.
CMGI’s early successes include Lycos Inc., bought by Terra Networks for $6.5 billion in October 2000. CMGI sold GeoCities to Yahoo Inc. in 1999 for $4.1 billion. CMGI shares fell 5 cents to $1.37 on Nasdaq.
