ICGE

ICG Group, Inc. (ICGE)

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Internet Capital Group Inc. (ICGE)

Q1 2010 Earnings Call

May 7, 2010 10:00 am ET

Executives

Walter Buckley - Chairman and CEO

Kirk Morgan - CFO

Karen Greene - VP of IR

Analysts

Michael Huang -Thinkequity Lic

Jeff Van Rhee - Craig Hallum

Scott Berg - Feltl & Company

Ben Atkinson - Gagnon Securities.

Sasa Zorovic - Janney Montgomery Scot.

Bill Sutherland - Boenning and Scattergood

Tom Heisenberg - J Goldman

Presentation

Operator

Welcome to the First Quarter 2010 Internet Capital Group Earnings Conference Call. My name is Jasmine and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions)

I would now like to turn the conference over to your host for today, Ms. Karen Greene, Vice President of Investor Relations. Please proceed.

Karen Greene

Good morning. This is Karen Greene with Investor Relations and I want to welcome you to ICGE's first quarter conference call.

I would like to remind everyone that we are going to use presentation slides to accompany our prepared remarks today. These slides can be found on our website at icg.com. Go to the Investor Information tab and you will see an icon for our first quarter conference call. The slides can be accessed through that icon. For those of you without immediate access to our website, the conference call and presentation slides will remain on our website and be available for future reference.

On the call this morning, we will be discussing certain non-GAAP financial measures. For additional information on these non-GAAP financial measures, including a reconciliation of these measures to the most comparable GAAP measures, please refer to the press release we put out this morning including the attachment to that press release.

To aid in the comparability of the aggregate core company information, ICG is presenting aggregate core company information assuming the company's acquisition of GovDelivery occurred on January 1, 2009 by including GovDelivery's historical results for all periods presented.

In an effort to give our investors additional data points regarding the value of our partner companies, this quarter we are presenting aggregate Last Round Value with respect to our equity partner companies. We calculate the Last Round Value of each equity partner company by multiplying that company's equity value immediately following it first financing round by our current fully diluted ownership percentage in that company, assuming the conversion is all of that company's preferred stock into common stock.

There can be no assurance that the values used in calculating the Last Round Value”for any company equals the current fair value of that company. The value that we may ultimately realize upon a liquidity event with respect to any individual company may differ materially from our Last Round Value.

A press release is also available on our website, which is icg.com. Again to access the press release on our website, go to the ICG's Press Release tab and select the May 7th, 2010 press release.

Before we begin, I would like to briefly review our Safe Harbor language. The statements contained in this press release that are not historical facts are forward-looking statements that involve certain risks and uncertainties including, but not limited to risks associated with the effected economic conditions generally, capital spending by our partner companies/customers. Our partner companies ability to compete successfully against their respective competitors.

Our partner company's ability to timely and effectively respond to technological developments, our ability to have continued access to capital and to deploy capital effectively and acceptable terms, our ability to maximize value in connection with divestures. Our ability to retain key personnel and other risks and uncertainties detailed in ICG’s filings with the Securities and Exchange Commission. These and other factors may cause actual results to differ materially from those projected.

With that I’ll turn the call over to Walter Buckley, ICG’s Chairman and CEO.

Walter Buckley

Thanks, Karen and welcome and thank you for joining us this morning. Today, I’ll provide an overview of ICG and its partner companies for the first quarter and Kirk Morgan our Chief Financial Officer will follow with ICG’s financial results and a review of partner company performance for the quarter.

Before I review the highlights of the quarter, let me first turn to an exciting announcement we made yesterday, about our ownership increase in ICG Commerce. ICG acquired an additional 12% of ICG Commerce from a minority stockholder for approximately $35.3 million in cash, and we hope to buy the remaining 5% of ICG Commerce held by non-ICGC Management stockholders as soon as practical. We have been working towards this for several months and are excited we've accomplished this goal for a number of reasons.

Now turning to slide five, first and foremost we view owning a larger stake in our most profitable company as an important strategic accomplishment. ICG Commerce is a leader in a market that is large and growing.

Additionally, this platform company has a powerful value proposition and impressive customer list and an exceptional management team led by Carl Guarino. Consistent with our strategy, this transaction provides ICG with a large ownership stake in a strong cash flow generating company with a significant cash balance.

Finally, this ownership increase more closely aligns ICG and ICG Commerce focus on long-term value creation and provides ICG Commerce with greater flexibility to pursue potential acquisitions and other key growth drivers. Overall we view this transaction as an important milestone in building value for ICG and its stockholders.

Read the rest of this transcript for free on seekingalpha.com