Bob and stockpeeker, CGI breakdown by division (FY04 proforma numbers):
Pro Forma Statement of Operations
Twelve Months Ended December 31, 2004
CGI WebCapades Pro Forma Adjustments Total
Net Revenue $ 21,473,565 $ 4,264,607 $ 25,738,172
Cost of Revenue 4,057,843 951,625 5,009,468
Gross Profit $ 17,415,722 $ 3,312,982 $ 20,728,704
Operating Expenses 12,691,946 1,264,520 (A)163,474 14,119,940
Income From Operations $ 4,723,776 $ 2,048,462 $ 6,608,764
Other Income(Expense) 2,423 10,978 13,401
Income Before Income Taxes $ 4,726,199 $ 2,059,440 $ 6,622,165
Provision for Income Taxes 1,786,233 0 (B)719,386 2,505,619
My impression is that Websourced is their primary profit driver. That is a service where they enhance positioning in search engine results for companies. They recently began a pay per click advertising model. They have a dating service subsidiary also. Bobwins
I thought THK's big moneymaker was online personal connections, sorta like a dating service for those who like to fantasize.
They have numerous businesses which they like to infer are well-integrated and connected with lots of cross-selling opportunities, etc., but earning .20 for the year is not enough to take these guys to the moon with Alice. Afterall even unsexy DAAT (much cheaper than THK) will have better EPS than THK this year.
They are still trying to grow by acquisition, which always draws more potential problems than organic growth. I feel much safer with something like DAAT or MDF than THK. JMHO ...
Primary Ads deal closed. Company reiterated guidance of .20-.25 eps for 2005. Stock up a little. I just don't understand why THK doesn't get google type pricing. Same business. I guess it's going to take awhile to get name familiarity. Bobwins
This is a MAJOR acquisition in a VERY hot space at a VERY good price from a VERY well structured deal that fits VERY well with CGI's other subsidiaries.
Bravo Jacobs! VERY well done.
I would personally like to see more done in the affiliate network space with CGIH/Think Partnership.
coolguy re cgih.ob. I think AMEX listing will help the stock a lot. They have a nice combination of profitable internet divisions, including internet advertising, which I think will become a mainstream source of rev and profits.
Stock is giving back some now but I am holding for the long run potential of this company. I think its a survivor in a rapidly growing industry. The amount of money that is spent on advertising in US is staggering. cgih.ob should get a decent piece of the action thru their search engine optimization division as well as traditional and internet advertising divisions. Internet dating seems to be here to stay so Cherish.com will help them, too.
The AMEX listing will give them visibility and make them a more respectable choice for mutual funds and investors.
I know many like nasdaq for "tech" companies but I have had great luck with companies that have moved to AMEX. I think anything is an improvement from otc. Good luck, Bobwins
The buzz in paid search
By Bambi Francisco, MarketWatch
Last Update: 2:28 PM ET Mar 1, 2005
SAN FRANCISCO (MarketWatch) - As Wall Street looks at volume of searches and other metrics to determine the growth rate of the keyword-marketing business, one veteran search observer says his metric is simple: people.
Danny Sullivan, editor of Searchenginewatch.com and host of the 6th annual Search Engine Strategies conference in Manhattan this week, says the gathering has attracted 1,300 sign-ups. That's up from 1,100 last year. It's also up from 325 people who attended the conference back in November 1999.
"My numbers are human beings," Sullivan said. "It keeps getting bigger and bigger."
Sullivan said that the new attendees consist of executives who work in-house and not at advertising agencies. The broad interest in search-engine marketing is one reason why Sullivan believes the concern over paid-search pricing is overblown.
"The market is completely undervalued," he said. "That's why we have 1,300 people paying $1,500 for four days."
The paid-search advertising market has been under a microscope ever since Yahoo (YHOO) and Google (GOOG) reported outstanding numbers, while eBay (EBAY), commerce and other companies paying for keyword terms have seen their costs go up.
The question has been raised: Was it a seasonal issue, or the typical holiday-marketing push, that sent pay-for-performance advertising prices higher?
Sullivan believes that people are just using "seasonality" as an excuse.
"It's an excuse we're reaching for," said Sullivan, who said that it's difficult to gauge seasonality when the leading search providers do not break out what percentage of their sales come from contextual advertisements. Both Yahoo and Google provide their advertising listings on editorial pages as well as their search-results page. He believes Google generates a lot of advertising sales by placing its clients' advertisements on editorial pages.
Additionally, at least based on the interest in the conference he's hosting, it does appear the demand for paid-search advertising is sustainable. And, some observers believe there is a greater level of participation that's creating noise in the paid-search marketplace.
"We are definitely seeing keyword terms with significant price inflation," said Ellen Siminoff, founder of Efficient Frontier, a search-engine marketing company that manages $100 million worth of keyword purchases. "Those managing a handful of words are relatively unsophisticated. These are the ones seeing price inflation."
Who's providing the new source of keyword demand?
It does appear that venture-backed startups are becoming, in part, a new source of paid-search advertising demand. See Net sense.
Many startups are buying up keyword terms and trying to carve out niche search engine sites through which they can qualify the traffic and sell it at higher rates to advertisers.
These vertical sites have a shot but it'll be difficult down the road to compete against the majors, Google and Yahoo, said Sullivan. "When you get into this dangerous area of competing with the majors, you'll get licensed out, bought out or burned out," he said.
Voices in Silicon Valley agree that startups trying to tap into paid-search business may be eventually squeezed out.
"Similar to the late 1990s when buying and reselling domain names was all the rage, these days several companies and individual entrepreneurs are out there buying search keywords and then trying to resell them to the higher bidder," said Bill Burnham, a venture capitalist, and former Internet analyst at CS First Boston.
See interview with Burnham
"The big risk they face is that either the advertisers or the search engines will try to cut out the middleman through either a new technology or simply banning the practice," said Burnham.
"If aggregators continue to buy search keywords in bulk and resell the traffic/lead for 2X via an arbitrage model it will assert pressure on the search providers [Yahoo and Google] to go more downstream to acquire the marketers directly at some point if they want to continue to grow their top line revenue," said D.C. Cullinane, CEO and co-founder of thinkingVoice, a startup focused on a pay-for-call business model.
Why CGIH is a growth stock
Feb 22, 2005 - CGI Holding Corporation Acquires Ozona Online Network
Feb 22, 2005 - CGI Holding Corporation Acquires Personals Plus
Feb 8, 2005 - CGI Holding Corporation's WebSourced Subsidiary Selected by DEWALT
Jan 4, 2005 - CGI Holding Corporation Acquires MarketSmart Advertising
Dec 28, 2004 - CGI Holding Corporation Enters Into Agreement to Merge With Proceed Interactive
Dec 13, 2004 - CGI Holding Corporation's WebSourced Subsidiary Expands into Training and Consulting Services
Dec 7, 2004 - CGI Holding Corporation Completes $15.05 Million Private Placement
TWO ACQUISITIONS ANNOUNCED THIS MORNING
LAKE BLUFF, Ill.--(BUSINESS WIRE)--Feb. 22, 2005--CGI Holding Corporation (OTCBB: CGIH - News; the "Company") today announced that the Company has acquired Ozona Online Network, Inc. ("Ozline"), a provider of a comprehensive scope of online services including start to finish web design, custom web based applications, database systems, managed and shared hosting solutions, e-commerce, and high-speed business Internet access (see www.ozline.net). The Company estimates that Ozline will add approximately $300,000 per year in pre-tax earnings to the Company, and expects the merger to be immediately accretive to its earnings.
The purchase price was $300,000 in cash plus 75,358 shares of the Company's restricted common stock. The Company has also issued warrants to purchase an aggregate of 60,000 shares of the Company's restricted common stock at $5.30 per share to the stockholders of Ozline.
Founded in 1997 and based in Clearwater, FL, Ozline has a satisfied client list that reads like a Who's Who of innovative companies including Canon, Komatsu USA, Dale Carnegie, Quantum Technology, and other clients such as General Electric, Ford Motor Company, and Marriott International through Ozline's Evigna Digital Catalog product. Rick Anderson, the founder of Ozline, will continue to lead the business following the merger.
Rick Anderson, the CEO of Ozline, explaining the rationale behind the merger, said, "Combining the technology and application development solutions of Ozline with the proven marketing expertise of WebSourced and MarketSmart Advertising, will allow us to provide the solution to any client's needs. With our combined services, there really isn't anything that we cannot offer a web-based client."
Gerard M. Jacobs, the Company's CEO, stated, "After the problems our online dating business encountered last September caused by multiple hurricanes, and in light of the continuing growth we are experiencing, we became determined to strengthen our company's in-house technology expertise in several areas. Ozline is a key piece of that solution for us, and we are fortunate to have Rick Anderson as a new partner to help us continue to grow CGI."
"Driving the decision to acquire Ozline was the ongoing need for technology and hosting services that our businesses and our clients continually require," adds Scott Mitchell, CEO of the Company's Cherish subsidiary. "Ozline offers the technical expertise and Internet services that will make us more effective at realizing the growth that our subsidiaries and our clients have planned."
Steven "Pat" Martin, the CEO of the Company's WebSourced subsidiary, added, "Ozline's application development and hosting services will allow WebSourced to continue its drive to offer complete business solutions for its clients."
LAKE BLUFF, Ill.--(BUSINESS WIRE)--Feb. 22, 2005--CGI Holding Corporation (OTCBB:CGIH - News; the "Company") today announced that the Company has acquired privately-held Personals Plus, Inc. ("Personals Plus"), the owner of several online dating and relationship websites. The acquisition is expected to significantly expand CGI's customer base in the area and to provide synergies between the websites that the combined companies will offer. The Company estimates that Personals Plus will add approximately $1 million per year in pre-tax earnings to the Company, and expects the merger to be immediately accretive to its earnings.
The purchase price was $2,262,500 in cash plus 426,244 shares of the Company's restricted common stock. The Company has also issued warrants to purchase an aggregate of 60,000 shares of the Company's restricted common stock at $5.30 per share to the stockholder of Personals Plus.
Based in Apollo Beach, FL, Personals Plus has grown steadily since its inception, by providing lifestyle-oriented web services focused on online personals and social networking. Paul Widisky, the founder of Personals Plus, will continue to lead the business following the merger. Personals Plus will become a subsidiary of the Company's Cherish, Inc. subsidiary.
Gerard M. Jacobs, the Company's CEO, stated, "Personals Plus nicely expands our existing portfolio of profitable online dating services. We look forward to having Paul Widisky as one of our partners in continuing to build CGI."
Scott Mitchell, the CEO of Cherish, Inc., the Company's online dating businesses, added, "Personals Plus is an exciting addition to the world-class lineup of online dating and personal relationship websites that we are building at CGI. We see immense opportunity with the combining of Cherish's services with those of Personals Plus."
Paul Widisky, President and CEO of Personals Plus, said of the merger, "We are excited to enter this truly beneficial partnership. Not only will we be able to continue to grow, but we will also be in a position to utilize the marketing expertise of WebSourced and MarketSmart Advertising."
They made an acquisition in January of MarketSmart.
The December pending merger with Proceed Interactive has not closed. Probably should have been some word on the status by now if you note the date in the SEC filing:
"Either party can terminate the Merger Agreement if the transactions contemplated thereby have not closed on or before February 15, 2005. As such, there can be no assurance that the Company will acquire Proceed as contemplated by the Merger Agreement."
You may be right. You can make a public filing of a deal that isn't done yet. Also you can't determine if its going to have a material effect on the financials of cgih.ob until you actually have full access to the financials and agree what is going to happen with the assets. Let's hope they are working on big deals. Of course that means they won't be able to tell me anything when I call! Bobwins
I think the last acquisition that they announced was in December. They also raised over $15M in December to fund accretive acquisitions. Maybe there are more that we have not heard about and that is what is holding up the filings? I'd certainly be happy to see that!
Argyll, re cgih.ob CEO of Nwau said he didn't want to pay accountants and attorneys to amend filing so he was going to delay it until acquisition was done and financials were able to be consolidated with existing nwau financials.
It could have been done but he said it would cost the company more money. Whether that is the hangup with CGIH is hard to tell since they aren't communicating.
If there is a problem with their accounting, they probably don't want to advertise it publicly until they can adjust or get their accountants to agree with the SEC.
There could be other reasons. My stake in cgih.ob is pretty small so I haven't even tried to communicate with IR. Maybe I will call this week if I get time. Bobwins
I believe NWAU delayed a filing for listing because of an acquisition. Could CGIH acquisitions be the delay in AMEX approval? Do they have to basically refile, or substantially amend their filing each time they do so? They filed the SEC form for the last one on January 20. It could take months to put the financials and filings in order. If they keep doing acquisitions this might delay AMEX longer.
I am still holding and like the longer term prospects. The delay in getting a listing on a higher exchange is troubling. There is also a fair amt of insider selling.
I still think CGIH.ob is in the right spot due to their three profitable internet divisions. Maybe all these mergers have taken a toll. Don't know. Holding. Bobwins
Darn! Up .40 yesterday and another .30 today. Missed all my low bids.
anyone aware of when cgih's earnings are due out? What happened to amex listing?
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Merrill ups online-ad outlook
By Bambi Francisco, CBS.MarketWatch.com
Last Update: 12:32 PM ET Jan 26, 2005
SAN FRANCISCO (MarketWatch) - Merrill Lynch Wednesday raised its outlook for online ads, predicting that this channel will represent 4.6 percent of U.S. ads this year.
Merrill Internet analyst Lauren Rich Fine projects that marketers will place $12.34 billion in online ads in 2005 out of the $273 billion spent in total U.S. advertising. Fine previously estimated that only 4.2 percent of U.S. ad dollars would go online.
Fine estimates that 3.7 percent of total ad spending went to the Internet last year, or less than $10 billion.
Part of her optimism stems from discussions with major advertisers.
Three large advertisers are now allocating as much as 7 percent of their ad budgets to online marketing, she wrote. These advertisers are in the auto, food and beverage-and-drug businesses.
Indeed, there are a number of fresh signs that support any optimism about overall advertising. EBay (EBAY) said advertising expenses were higher in the fourth quarter and would continue to be so this year. Netflix (NFLX) CEO Reed Hastings said he saw advertising inflation in the fourth quarter and throughout the remainder of this year.
On the flipside, companies that rely on online advertising are showing positive results.
InfoSpace (INSP), which uses online advertising for the bulk of its sales, late Tuesday reported fourth-quarter sales that more than doubled to $79 million. Its online search and directory business saw sales grow 66 percent to $47 million.
Yahoo (YHOO), which reported fourth-quarter results last week said it generated $3 billion for all of 2004 in its marketing services business alone. That was up 150 percent from the previous year. In the fourth quarter, Goldman Sachs estimated that Yahoo's paid-search advertising grew by 74 percent while branded advertising rose 43 percent.
Paid-search growth slowdown
But this year, paid-search advertising may not grow as quickly as it did in the last couple of years. Merrill's Fine estimates that marketers will spend $4.9 billion in paid-search advertising this year, up 44 percent from last year. Paid-search advertising is purchased via keywords and displayed on search-results pages.
Paid-search should remain a big driver of online ad spending this year, but won't be growing as quickly as prior estimates, Merrill's Fine suggested.
Fine now expects paid search, as a percentage of U.S. online spending this year, to drop to 39 percent from a prior estimate of 43 percent.
Other forms of advertising, such as branded advertising, are expected to make up the other portion of online ads, she suggested. Branded advertising is a term used to differentiate ads purchased via CPMs (or cost per 1,000 impressions) versus sponsored links, which includes paid-search advertising and contextual advertising. Unlike branded advertising, contextual advertising is purchased via topics and paid per click. Unlike paid-search, contextual ads are displayed within editorial pages and not search-results pages.
What's the take-away from increasing online ad spending but a slowdown in paid-search? Good news for those positioned to take other forms of online advertising, like Yahoo.
Fine, like many of her Wall Street peers, believes that Yahoo is in a much better position to receive other forms of online advertising, such as branded advertising, over Google.
Fine said that based on traffic data, it appears the biggest beneficiaries of search, Yahoo (YHOO) and Google, (GOOG) are "likely" to see lower share gains because of competition. Data from comScore Networks show that Google's searches are leveling off or slightly decreasing while Yahoo's share is increasing, but at a slower rate than previously forecast, she wrote. She estimates that Yahoo will have 17.9 percent of the paid-search business by 2009, versus her previous estimate of 22 percent, while Google's market share will drop to 15 percent. Google currently has 34.8 percent share of all U.S. searches conducted while Yahoo has 31.8 percent, according to comScore.
To this end, Fine raised her rating on Yahoo (YHOO) to a "buy" while maintaining her "neutral" stance on Google.
Keeping up with video search
Yahoo launched a search service Tuesday that lets users search content on Bloomberg TV, BSkyB and the BBC. Yahoo also unveiled its video-search service on the Web.
On the same day, Google unveiled Google Video, a service that allows users to search for the content of TV programs. Google users will be able to search PBS, the NBA, Fox News and C-Span.
"What Google did for the Web, Google Video aims to do for television," said Larry Page, Google co-founder and president of products. "This preview release demonstrates how searching television can work today."
I notice there is constant selling (78,000 in January) from the Roberti-Jacobs Family Trust. CEO's name is Gerald Jacobs. Any relation?
The 9-09-04 PR says the company "intends to apply" to the AMEX, not that they have applied.
IPII announcement is still a few weeks away. My understanding is that CGIH was formed by buying a shell vs. IPO, therefore, there is some cleaning up of the books to meet listing reqs. Prior owner of shell still owns shares, so that fact (how many shares, where, ownership) may be the stickler in the filing paperwork.
I own both CGIH at 4.50 and IPII at 1.50 I think IPII will anounce shortly that they have been approved by the Nasdaq small cap market I presume we should get a boost from that since the shares a very undervalued..With CGIH I recently bought in just due to the fact that they have pulled back soo much with a nice profitable growth company it is...Looking for both to go up soon
Looks like there's still some selling pressure. I have a bid in at 4.50. You mentioned Amex move...I haven't seen the announcement from the company. Did I miss that?
Would you recommend IPII for that reason?
Argyll, I think the stock registration is part of the reason for the recent weakness in CGIH.ob. I like the business plan here and feel that the growth in revs and profits will continue. There could be additional selling as a huge number of shares were registered. This doesn't mean that all the shares will be sold. It is simply a notice that all the outstanding shares have been registered and could be sold.
There are likely to be former owners of CGIH acquisitions who will choose to sell all or part of their shares to realize profits from the sale of their former companies.
I can't predict how long that will overhang the stock. However I see the increased results as a positive that should overcome this selling pressure. Another positive that could soak up selling shares would be an AMEX listing. I have owned several stocks that zoomed after getting listed. This is a relatively low p/e internet stock that is focusing on the profitable businesses in the internet space. There is no doubt in my mind that internet advertising is going to be very large. CGIH.ob appears to be in several key niches that will continue to rapidly grow in revs and net profits. I think the current price is decent. I don't pretend to know if we have bottomed. The stock could continue its dive from the recent $6 peak. You may want to put in a low bid and watch for awhile to see how the stock reacts and whether there is evidence of large scale insider selling.
The overall market may have an impact also as it has been weak in 2005. Offsetting this cautious approach is the impending move to AMEX and any acqusitions or PR the company releases. The recent interview shows that the company is interested in getting their story out to investors.
Good luck, I am holding after buying on the way down. I think this is a nice way to bet on internet advertising. Bobwins
I listened to the CEO interview which was informative and very impressive.
There's also an SEC document out about insider selling, posted on the RB message board. Perhaps you might take a look at it and see if it means more selling.
Would you call this a good buying point for CGIH?
PR today created some positive momentum for the stock. This stock has been beaten down on no news. Some of the stock that was registered has obviously found its way to the sell side. Hope it's just about done.
Today the PR had this statement that I think captures my interest in CGIH.ob:
CGI Holding Corp., based in Lake Bluff, Ill. (see www.cgiholding.com) also owns WebSourced, Inc., Morrisville, N.C., recognized as the world's largest search engine marketing firm, and Cherish, Inc., Clearwater, Fla., a leading Internet dating company.
"We see this as a powerful, synergistic move designed to combine our strengths as an award-winning ad agency with a world leader in online services," said Steven Thanhauser, CEO of MarketSmart. "The Internet has transformed the way businesses compete for market share worldwide. This move reflects that change and positions us to help our clients develop marketing programs and ad campaigns that will help them maximize their marketing opportunities. WebSourced is a powerhouse and together we see great things on the near horizon."
I think the PR reminded investors what a powerful combination this could be as Internet Advertising matures into a multi billion dollar market for all types of companies to advertise into. Bobwins
This is a painful sell-off in the short run, with no visible support until 4.50 (close to the 50 day EMA). I agree with the consensus view here that the stock is still undervalued, but it has moved up from a long base it set in the 2.5 - 3.0 range. Won't be for the faint of heart.....at recent highs around 6.00, the stock was trading at 27x the midrange of expectations for Fy05. It will have to work hard to move beyond the 30x forward valuation, but if any stock could do it, its this one.
Yes, today isn't looking to pretty, especially since I added a nice chunk in the 5.70's the other day, but it looks like it's found a base here. I'm wondering why it's taken so long for them to get approved for the Amex listing. This process has been going on for quite a while now.
Hey there cakes.
Hey there Bob...
...I didn't know there was a CGIH board here. I'm also holding CGIH, for many of the same reasons you are. You be a very exciting '05 for this company.
I am holding cgih.ob because it is a leader in internet advertising. Unknown by most consumers, Search Optimization is rapidly growing along with all internet advertising. CGIH makes sense as a stock investment because it is assemblying several profitable ways to participate in the movement of the internet into Main Stream advertising.
Most consumer brand companies realize they must advertise on the internet to get exposure to the millions of web surfers.
CGIH has the leading search optimization division.
CGIH.ob recently bought a traditional marketing/advertising company so that they could provide a full suite of advertising products to clients. Internet Advertising is rapidly becoming a multi billion dollar industry.
Dating service is growing and has been one of the few internet business segments to be consistently profitable.
I typically buy value stocks but I think cgih.ob is an important stock that will end up as a survivor in a rapidly growing sector and command a premium p/e. Bobwins