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***¶*** Raging Bull Loses Steam; CMGI Explores Sale of Site...

http://public.wsj.com/sn/y/SB977255254217057333.html

Dec 20,2000

Raging Bull Loses Steam;
CMGI Explores Sale of Site
By Peter Edmonston
WSJ.com

CMGI Inc. Chairman David Wetherell was once such a Raging Bull that he effectively bought the company.
AltaVista Co., majority owned by Internet incubator CMGI, paid $163 million in stock this February for Raging Bull (www.ragingbull.altavista.com ), a Web forum appealing to investment groupies, tech-stock enthusiasts and penny-stock fans.

But now Mr. Wetherell and CMGI, like other reformed optimists, are cutting their losses. And one of the properties that won't make the cut is Raging Bull.

David Emanuel, a spokesman for AltaVista, confirms that the company recently hired investment bankers Chase H&Q to search for potential buyers. He says several interested parties have emerged, including a media company and a financial-services firm, but declined to be more specific.

Mr. Wetherell, a CEO who used to post messages on the Raging Bull boards, says AltaVista, has merely changed its strategy to focus on its roots as a search engine. AltaVista had aspired to be a broad Internet portal along the lines of Yahoo! Inc., and Raging Bull was thought to be a centerpiece.

"We just think Raging Bull is worth more to someone else," says Mr. Emanuel. "It's a very strong financial and investor community."

But analysts say sites like Raging Bull may be a harder sell in a much-changed environment where shell-shocked investors are less inclined to seek out gung-ho stock chatter.

"The latest wave of online investors are less aggressive and less confident," says Robert Sterling, a senior analyst with Jupiter Communications, an Internet research firm in New York. He says these skittish investors probably aren't looking for the free-wheeling environment found in many stock-discussion boards.

Indeed, Raging Bull's mojo appears to have faded along with the Nasdaq Composite Index. Media Metrix says the number of unique visitors to Raging Bull in the month of October -- the most recent month when data are available -- fell below 200,000, the minimum threshold for measurement by the Web-traffic monitor. At its peak in March, Raging Bull attracted 806,000 unique visitors, Media Metrix says.

When AltaVista closed its deal to buy Raging Bull in February, the Nasdaq was hovering around 4500. Since then, the Nasdaq has fallen nearly 2,000 points. And stocks of Web sites focused on investors, such as TheStreet.com Inc. and MarketWatch.com Inc., are off sharply from their spring highs.

Raging Bull may also be suffering from investors' ebbing fascination with so-called penny stocks -- thinly traded, low-priced shares that change hands on the OTC Bulletin Board. Many investing Web sites don't permit discussion of penny stocks because they are susceptible to manipulation by unscrupulous posters. But some of the most popular message boards on Raging Bull focus on penny stocks.

Monthly trading volume on the OTC Bulletin Board surpassed 25 billion in March and then collapsed to less than four billion in July, according to statistics on the OTC Bulletin Board's Web site. By November, the share volume had recovered slightly, rising to 5.33 billion.

Tara Burgess, a spokeswoman for Raging Bull, argues that the Web site hasn't seen the kind of drop-off that these numbers suggest. In recent weeks, Raging Bull has received between 55,000 and 65,000 posts during each day that the stock market is open, compared with about 85,000 per day during the frothiest days of March, Ms. Burgess said.

Whatever its traffic, Raging Bull isn't making money. And it remains almost completely dependent on advertising revenue in a time when it is becoming scarce. CMGI, for its part, has been rapidly casting off its advertising-dependent Internet businesses in a bid to appease Wall Street. Last month, the company announced plans to close two of its ad-supported ventures: iCast, an entertainment Web site, and 1stUp.com, a free Internet service.

Ms. Burgess says Raging Bull is poised to become profitable within the next six months. The company has recently cut back on its expenses, laid off a "small number" of employees and abandoned plans to become an all-encompassing money and investing site, according to Ms. Burgess. "We've been focusing on acting like a grown-up company," she says. "We are focusing on what we do best: Investor discussion."

William Martin, who co-founded Raging Bull in 1997 when he was still in college, says he was a bit saddened to learn his creation was up for sale. Just two years ago, CMGI agreed to pay $2 million for a 40% stake of Raging Bull, transforming Mr. Martin and his college pals into Internet bigwigs nearly overnight.

True to its name, Raging Bull continued to see its fortunes rise, snaring $20 million in additional venture capital before it was acquired outright by CMGI's AltaVista in February 2000.

Now a co-manager for venture-capital fund Silicon Ivy Ventures, 23-year-old Mr. Martin argues that Raging Bull shouldn't have any trouble finding a new home. But he concedes that AltaVista's timing is less than ideal. "In February, the market was pretty close to the top," he said.

Other investing Web sites may be facing difficult times as well. Monthly unique visitors to Silicon Investor, a stock-discussion group operated by InfoSpace Inc., dipped below 200,000 in August, September and October, according to Media Metrix. That is down from 340,000 unique visitors in March.

Silicon Investor spokeswoman Jill Munden declined to comment on the accuracy of Media Metrix's numbers or provide her own. But Ms. Munden disputed the idea that the markets have hurt Silicon Investor. "We find that the growth we do experience is due to people moving to support each other."

Yahoo! Finance, the money and investing section of Yahoo's Web portal, still enjoys far more traffic than its smaller message-board rivals. Media Metrix reports that 7.4 million visitors went to Yahoo Finance in October, making it the busiest month this year for the money section.

Stock-discussion groups will have to adapt to less exuberant times, says Jupiter's Mr. Sterling. "The challenge is to be more advice-driven," he says, pointing to the Motley Fool, a Web site that has chosen to emphasize even-keeled analysis over hair-trigger stock trading. "The Motley Fool is probably very well positioned to continue to do well in a less excited environment," Mr. Sterling says.

Indeed, Motley Fool has shown a remarkable ability to maintain its traffic levels despite the market turmoil. Media Metrix tallied 2.1 million unique visitors to Motley Fool in October, just slightly lower than its number of visitors in March.

"We've managed our boards pretty tightly," says Erik Rydholm, Motley Fool's co-founder and chief operating officer. The company doesn't allow discussions about penny stocks. The Motley Fool also employs message-board monitors -- known as "strollers" -- to spark conversation, provide information and preserve a sense of decorum.

Mr. Rydholm was reluctant to criticize the path taken by Raging Bull. But he observed that the weakening market for Web advertising "took the frosting off of everyone's business. But for the ones whose businesses are totally built around the frosting, it hurt the most."

CMGI's Mr. Wetherell said Web companies need to re-evaluate their best-laid plans. "We were eager to see Raging Bull become the centerpiece for AltaVista's new finance community," he wrote in an e-mail note this week. But he added, "We supported AltaVista's decision to find a new home for Raging Bull ... that could take more immediate advantage of its traffic and very desirable, affluent user base."

Write to Peter Edmonston at [e-mail]