First article, 10 December 2000, written by Saul Hansell from The New York Times:

FIRST came the flashing video images. Then the dancers in psychedelic body paint, the New Age pianist, the opera singer in a white fur stole who descended on a construction crane and three men in gas masks who banged on garbage cans to disco music. White smoke billowed. Finally, the lights went up to reveal the Boys Choir of Harlem, singing spirituals.

This sumptuous show last fall at the Hammerstein Ballroom in Manhattan represented the avant-garde not of theater but of Internet hype. It introduced a new home page and ad campaign by AltaVista, the search engine, to about 100 journalists and Wall Street analysts, and laid the groundwork for an initial public offering. AltaVista — prompted by its new owner, CMGI, one of the most successful incubators of Internet companies — promised to take on Yahoo with ”a portal as powerful and immediate as life itself.”

To do so, it would spend $120 million on a new slogan, ”Smart is beautiful.”

Mr. Wetherell, 46, says the company is taking the steps that are needed to thrive in tough times. ”Our foundation is solid and mission is clear,”

Mr. Wetherell contends that CMGI is far more than a dream.

”I try to use technology to solve tough problems that have broad market appeal,” he wrote. ”This provides high barriers to entry, providing there is a first-mover advantage and proper leverage from other CMGI companies. When all of these elements exist, we have a formula for success.”

A year ago, CMGI was the model incubator, a new corporate creature somewhere between a conglomerate and a venture capital fund. It started some companies, invested in others and kept operating control of many, hoping to take all of them public. Mr. Wetherell was hailed as the ”Warren Buffett of the Web,” by The Daily News of New York, and CMGI ended 1999 with a market value of $41 billion. It was the best-performing United States stock of the preceding five years, returning 4,921 percent.

as the Nasdaq was cresting, CMGI’s stock reached a record high, $163.50, on Jan. 3.

… … … … … …

In its fiscal year ended July 2000, CMGI lost $1.4 billion on revenue of $898 million.

Today, CMGI’s main companies, like Alta Vista and Engage Technologies, an Internet advertising business, are scaling back. The chief executives of both of those companies resigned recently. Smaller companies are being sold or merged. And CMGI’s shares are off 91 percent this year, to a value of about $3.8 billion, closing on Friday at $11.94.

Another former executive described CMGI headquarters as a ”giant chicken with its head cut off.”

”A year and a half ago, people were saying this was the best business model ever,” said Vik Mehta, an analyst at Goldman Sachs. ”Now the financial markets are telling them they will go out of business.”

The online retailers in CMGI’s venture capital portfolio faced more bitter medicine. Unable to raise more money from outside venture funds, and unwilling to use more of its own cash, CMGI let Furniture.com, Mothernature.com and Productopia.com simply die off.

In September, CMGI announced a restructuring, saying it would focus on five business lines and on venture capital. It would chop the number of companies it operated from 17 to less than 10 through mergers or sales. The new goal would be profitability at all of its units.

”We are concentrating on what works in both today’s and tomorrow’s Internet,” Mr. Wetherell wrote. ”Advertising will continue to be a major force for the Web, but it will be slower to develop than other revenue sources. When it does take off more strongly, we are well positioned to benefit.”

Mr. Wetherell, moreover, wrote that he began looking for a chief operating officer last month because ”we are getting to critical mass in size.”

”The market had evaluated Wetherell on his ability to identify great new concepts,” said Lowell Singer, an analyst at Robertson Stephens. ”Now the rules have changed. He is being graded on his ability to run them as businesses.”

[Read full article here.]