CMGI Circles Back to Supply Chain

The company once rode high on Wall Street as a Web incubator, but now it's planning a return to its origins in supply chain management with two acquisitions.

CMGI is returning from a role as an Internet incubator to its real roots as a supply chain provider, said George McMillan, the companys CEO and president. CMGIs new ModusLink business unit, being launched this month, combines the companys existing SalesLink with recently acquired Modus Media.

"Weve spent the last couple of months repositioning ourselves, after divesting ourselves of other properties," McMillan said in an interview with

In the late 1990s, CMGI Inc. snapped up a passel of dot-com properties that included AltaVista, Engage, Equilibrium and uBid. But then, the Internet boom went bust.

"CGMI had some horrible [financial] quarters after that," said McMillan, who joined CMGI in mid-2001 and stepped up to his current job in early 2002.

"Through cost reductions and other measures, however, CMGI did manage to scratch its way back," he said.

These other measures have included CMGIs sale of its AltaVista search engine business to Overture Services in April 2003. But the company continues to hold some properties through its CMGI@Ventures subsidiary, he noted.

/zimages/4/28571.gifClick here to read about Overtures acquisition of AltaVista.

Meanwhile, CMGI never really left the supply chain business, according to McMillan. "SalesLink was at the original core when CMGI was founded," he said.

During the post-dot-com era, CMGI has rebuttressed its spot in the supply chain market with not just one but two buyouts: iLogistics, back in 2002, and Modus Media, finalized just last week. CMGI paid almost $157 million in stock to obtain Modus, along with $71 million in cash to retire Modus debt.

But the new acquisition just about doubles the size of CGMIs supply chain presence, McMillan said. Particularly strong in the Asia Pacific market, Modus supplies services ranging from fulfillment, order management, reporting and analysis to e-commerce support, financial management and content manufacturing.

CMGIs new ModusLink business unit will compete in the SCM/L (supply chain management/logistics) global contracting business against players such as GlobalWare, Zomax, Bertelsmann and the turnkey division of Banta, according to McMillan.

"Our geographic presence will be overwhelmingly the best," he said. ModusLink will employ a total of 3,900 people at 38 locations worldwide, including five sites in China.

McMillan pointed to cultural similarities and Modus Medias customer base as additional attractions in prompting the buy.

/zimages/4/28571.gifGlobal Exchange Services is working on products that will enable users to make RFID information available to the supply chain network. Click here to read more.

CMGI moved from its earlier offices in Andover, Mass., to SalesLinks headquarters in Charlestown, Mass., in August 2003. This month, the company is relocating to Modus space in Waltham, Mass.

"The benefits [of the Modus acquisition] will be accretive," McMillan said. "Over the coming weeks, Ill be explaining more about this to shareholders."

Beyond his duties as CMGIs president and CEO, McMillan will serve as interim head of ModusLink while CMGI seeks out a permanent chief for the new supply chain business unit.

On July 12, several weeks before the Modus Media deal became final, CMGI announced other ModusLink hires including Dan Beck, president of the Americas operation; Dolph Westerbos, president of operations in Europe; and Ken Southerland, president of Asia-Pacific operations.

/zimages/4/28571.gifCheck out eWEEK.coms Supply Chain Management & Logistics Center for the latest news and analysis of enterprise supply chains.