CMGI CEO David Wetherell said Nov. 13 that the company will take a $90 million restructuring charge and will sell or shut down its online entertainment service, iCast, because of heavy capital costs and an unclear date for profitability. Mr. Wetherell said the company would seek buyers for iCast as it winds down its operations. If CMGI does not find a buyer, it will close the business by the end of January. CMGI's free Internet service provider 1stUp.com also will wind down operations over the next 60 days. About 75 employees at iCast's offices in Los Angeles, New York and San Francisco, were laid off Nov. 13. An estimated 150 staffers at iCast's Woburn, Mass., headquarters will stay on longer to wrap up the business over the next two months. CMGI will try to move iCast customers to another free ISP if it cannot find a buyer for the company. Mr. Wetherell said CMGI will sell or shut down 1stUp.com, and exit the advertising-supported Internet access business. 1stUp.com runs free Internet access for several partners including AltaVista Co., Lycos and [email protected]
ICast and 1stUp.com rely primarily on online ad revenues, as do media operations AltaVista and Engage. AltaVista has tried to step away from its reliance on online advertising by focusing on its enterprise search business. In a statement, CMGI said it expects to incur restructuring charges of $8 million to $10 million for the quarter ended Oct. 31 and another $75 million to $80 million in the quarter ending Jan. 31.
Copyright November 2000, Crain Communications Inc.