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The Boston Globe OnlineBoston.com Boston Globe Online / Business / 2001 Globe 100

Left in the dust? Hardly

Old economy companies led Bay State bulls

By Peter J. Howe, Globe Staff, 5/22/2001



Old economy companies led Bay State Bulls
The shining lights of the local investment world were companies that sell sneakers, blood tests, clothes for middle-age women, and life insurance.

1. J. Jill Group
2. Inverness Medical Tech.
3. Reebok Intl.
4. Bostonfed Bancorp
5. John Hancock Financial

1. Aztec Tech. Partners
2. Engage Inc.
3. CMGI Inc.
4. Telaxis Communications
5. NaviSite Inc.

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hat new economy sure is toast.

As a passel of e-whatever companies racked up stunning stock-market plunges in the past year, the shining lights of the local investment world were companies that sell sneakers, blood tests, clothes for middle-age women, and life insurance. Plus a quiet little bank that developed a strong new business lending money to trailer-home buyers.

In other words, all kinds of make-me-yawn companies that were supposed to get left in the dust of the Internet stampede.

The Internet stampede, it turned out, headed right off a cliff, with e-consultant Aztec Technologies and North Andover Internet conglomerate CMGI at the head of a group of 13 Massachusetts companies, virtually all of them dot-com-oriented, that lost over 95 percent of their stock value in the year ended March 31.

Instead, the pack of Bay State bulls was led by Quincy-based J. Jill Group. Just a year earlier, it turned in the worst Wall Street performance of any publicly traded company in Massachusetts.

J. Jill, best known for its sophisticated, casual clothing for professional women ages 35 to 55, dropped nearly 75 percent in 1999 as its turn toward an ''edgy, urban'' look flopped. The company's return to its roots, a successful launch of a Web site, and a profit-inducing corporate restructuring vaulted its stock ahead 344 percent, to $17.50 as of March 31.

After back-to-back years of stunning stock-market gains - when Globe 100 leaders soared in value, sometimes ten- to thirtyfold - only six publicly traded Massachusetts companies saw their shares more than double last year.

After J. Jill, they included diabetes blood-test maker Inverness Medical Technology of Waltham, up 282.4 percent; Canton sneaker giant Reebok International, up 168 percent; and three financial-services players, Bostonfed Bancorp, John Hancock Financial Services, and Liberty Financial Cos., which all closed on March 31 a little over double their prices a year earlier.

While in 1999, you could make a lot more money on the winners than you could lose on the losers, 2000 turned out to be brutal for investors who picked the wrong horses - especially anything standing near CMGI.

Not only did CMGI's stock plunge 97.7 percent, two other leading bears were CMGI affiliates. The Internet advertising firm Engage Inc., of Andover, in which CMGI holds a 77 percent stake, followed a hot 1999 initial public offering with a 98.1 percent stock decline.

The fifth-worst Bay State stock last year was NaviSite Inc., of which CMGI owned about 75 percent as of January, a Web-page-hosting company that fell 97.5 percent.

Engage still talks about being profitable by the end of this year, while NaviSite has put itself on the shopping block. For all the nausea it has brought to its investors, CMGI still reported over $1 billion in cash and securities on hand earlier this spring, and an ample war chest to ride out the current debacle and perhaps scoop up some promising Net companies at fire-sale prices.

Offering inscrutable but apparently Internet-oriented services was a ticket to wealth for many businesses in the late 1990s.

But last year, a cluster of Massachusetts companies that all touted themselves as providers of ''e-solutions'' and ''i-solutions'' turned out to be solving few problems, except excess wealth on the part of their investors.

Leading the list of Bay State bears was Aztec Technology Partners of Braintree, which once boasted of 500 professionals on staff to handle everything from wireless extranets to Web-based knowledge management. Its shares fell 98.4 percent in the year ended March 31, closing at 12.5 cents.

You would be hard pressed to give a plain-English explanation of C-Bridge Internet Solutions' ''iSolutions,'' EPrise Corp.'s ''strategic content management solutions,'' NetGenesis's ''ultimate e-Metrics solution,'' or RoweCom's ''knowledge resource management and acquisition services.''

But if you spent $100 buying any one of their stocks on March 31, 2000, you'd find it painfully easy to say what it was worth a year later: five bucks.

Peter Howe can be reached by e-mail at howe@globe.com.


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