Lycos Gobbles Up Quote.com for $78 Million

Internet portal Lycos, Inc. announced today that it has agreed to buy Quote.com, Inc. for $78.3 (US$) million, plus the assumption of the privately held company’s stock option plan.

Neither company would disclose the value of the stock option plan.

According to Media Metrix, the Mountain View, California-based Quote.com is one of the top five investment sites on the Web. It offers its thousands of subscribers free financial news and information, as well as such premium services as real-time charting.

Added Dimension For Lycos

With this acquisition, Lycos bolsters its presence in the critical online financial industry, bringing an added dimension to its users. The company hopes the move will beef up its eyeball count substantially and increase its advertisers.

“This acquisition dramatically enhances our financial information offering, a key market segment we will focus on as we continue to grow the Lycos Network,” said Bob Davis, Lycos president and chief executive officer. “By adding Quote.com, we are advancing our strategy of aggregating the best content, commerce and community to create a compelling consumer environment.”

The acquisition is subject to Quote.com shareholder approval, but is expected to close by the year’s end.

Rapid Growth

Quote.com membership has been soaring. According to officials, it has increased by 46 percent over the last six months — increasing its subscriber base to hundreds of thousands. Some analysts estimate the number to be more than 300,000.

In addition, as a side benefit to the deal, Quote.com brings more than 150 co-branding affiliates to Lycos, including Charles Schwab, Waterhouse Securites, SunAmerica and Bank of America. These highly profiled sites already use Quote.com content and services.

Industry observers feel that this latest acquisition also makes Lycos even more attractive to potential buyout suitors. Earlier this year, Lycos’ 1999 merger plans with USA Networks crashed and burned.

About The Companies

Founded in 1993, Quote.com provides financial information on both a free and paid basis. It receives news and information from Standard & Poor’s and Reuters. In 1998, it pumped out sales of $12 million.

Quote.com is owned by founder Chris Cooper, along with Sequoia Capital, Highland capital, BARRA, Inc. and Shawmut Capital. It employs about 100 workers.

Founded in 1995, Waltham, Massachusetts-based Lycos is one of the fastest-growing portals on the Internet. The Lycos network of Web sites includes Lycos, HotBot and Tripod. The sites are visited by more than 30 million users each month. About 75 percent of Lycos’ revenue comes from advertising, but it also receives revenue though e-commerce and licensing agreements with partners such as Bertelsmann AG.

Investment firm CMGI owns 18 percent of the company. Lycos is forming an Internet partnership with several entities, including Paul Allen’s Vulcan Ventures and Bear Stearns.

In fiscal year 1999 ending in July, Lycos lost $52 million on revenue of $135.5 million. The company employs about 456 workers.