NaviSite, Inc. (Nasdaq: NAVI) rose 7/8 to 3 3/8 Friday after majority owner CMGI, Inc. (Nasdaq: CMGI) said it will accelerate a planned US$80 million financing agreement to the company. As of early trading Monday, the stock was trading at 3 1/4.
CMGI is giving NaviSite the funding, which was increased from an original$50 million, to compensate for potential losses the company might see fromits institutional lenders. The companies are negotiating terms of theagreement, and expect a definitive deal within two weeks.
Founded by CMGI in 1997, NaviSite provides Web hosting and applicationservices.
“The business metrics for NaviSite continue to exceed expectations,” saidCMGI chairman David Wetherell, “particularly as NaviSite increases its focuson large and middle-market enterprise customers.”
Wetherell believes the managed services sector in which NaviSite operates is a promising sector in the Internet market, and said that CMGI “remains committed to helping NaviSite reach its full potential.”
NaviSite reported a 455 percent year-over-year increase in revenue for thelatest fiscal quarter, as well as a smaller-than-expected loss. The companysaid investments in technology and staff have resulted in two new customer data centers being opened during the quarter.
Over the past year, NaviSite shares have traded as high as 164 15/16 and aslow as 3 3/8. The stock has come under pressure because of analystdowngrades and a weak Internet sector, as well as CMGI’s announcement thatit plans to cut some of its dot-com investments — though the company hassaid NaviSite is not one of the properties on the auction block.
In September, CMGI announced a reorganization designed to group itsinterests into like categories. As part of the plan, the company said itwould sell some of its holdings in order to focus on its more profitableinvestments.
CMGI closed Friday up 1/16 at 10 1/8.