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   | 2000 Globe 100 |

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

5. NAVISITE INC.
Web hosting firm eats 97% value loss

5/22/2001

   

BEARS & BULLS

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.
Continued

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


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


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hen your stock has lost 97 percent of its value over 12 months, it's important to keep things in perspective. For NaviSite, an Andover company that provides Internet hosting and other Web services, one thing to keep in mind is that if you measure the stock's performance over the 12 months that ended March 13 instead of March 31, the stock lost a full 99 percent of its value. It dropped from a high of $159.15 to $1.44.

It seems that all of the problems that crushed Internet stocks and dot-coms since March 2000 were magnified for NaviSite.

If there's such a thing as guilt by association in the new economy, NaviSite suffered from it. Not only does CMGI Inc. own most of NaviSite's stock - 76 percent of shares as of January - it and other CMGI affiliates also generated most of NaviSite's revenue.

So when CMGI and its portfolio companies started to sniffle, it was a good bet that NaviSite would catch a cold.

CMGI said it would shed businesses and cut spending to conserve cash, both hurting the bottom line at NaviSite. The fundamental problem facing CMGI and NaviSite was an instantaneous slowdown in Internet-based advertising revenue.

Now, it looks like it could be pneumonia. In March, NaviSite indefinitely postponed a presentation to securities analysts. It also said it had hired Wall Street bankers Goldman Sachs Group Inc. to advise it on ''strategic alternatives,'' including being acquired.

JEFFREY KRASNER

   


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