Internet Capital Gains on New Coverage

Internet Capital Group, Inc.(Nasdaq: ICGE) rose 22 U.S. cents to $4.75 Monday morning after Salomon SmithBarney began coverage of the stock with an outperform rating.

The Internet incubator’s “favorable two-year cash position” and the strengthof its top 15 partner companies make the stock a good value, Salomon SmithBarney analyst Charles Grom told the E-Commerce Times. Grom expects InternetCapital shares to reach $7 in a year.

“We believe they’re going to be able to ride through the next couple ofyears,” said Grom, a period that “hopefully” will provide enough time for the companyto develop its core assets.

ICG companies like Rightworks, ICG Commerce and E-Credit could becomemarket leaders, Grom said.

“Once these companies become reallydeveloped, [they] could provide a catalyst to ICG’s stock,” he said.

While the company will not be a high flyer even if it reaches the$7-per-share target, that would be a “decent” gain for the stock, said Grom.Over the past year, Internet Capital shares have traded as high as $156 andas low as $2.75.

“We don’t love the stock right now,” said Grom. “We like it.”

The company,he said, still needs to further solidify its cash position, and its partnercompanies still need to achieve key milestones in customer and financialgains.

Salomon Smith Barney also began coverage Monday of CMGI, Inc. (Nasdaq: CMGI), assigning that stocka lower rating of neutral.

“We just don’t see the visibility in [CMGI’s]cash position right now,” Grom said.

CMGI was up 19 cents at $5.47 in morning trading Monday.

While the company does have some “decent” investments, Grom said, each ofCMGI’s top partners is No. 2 or No. 3 in its market. AltaVista, for example, is”a good company,” but ranks far below No. 1 portal Yahoo!, he added.

“In the Internet arena right now, you just have to be the No. 1 player,”said Grom.

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