Lycos Stock Split Is Well Timed

Lycos, Inc. announced a two-for-one split of its stock this week just as the price of its shares skyrocketed on news of an unusually strong third quarter.

Driven by news that the company has overtaken Yahoo! as the most visited search engine on the Internet, Lycos (NASDAQ: LCOS) stock soared Tuesday and Wednesday to an 8 percent gain.

Despite the split, Merrill Lynch remains optimistic the stock price will continue to soar over the next year. Merrill Lynch raised its recommendation this week from “accumulate” to “long-term buy,” seeing a 12-month price target of $170 per share.

The stock split, approved by Lycos’ board of directors but still subject to shareholder approval, will be effective in late July. It will bring Lycos’ total outstanding shares to 87 million. Thanks to its third quarter financial performance, Lycos stock survived a tough day Wednesday on Wall Street for other Internet stocks.

Big Gain, Small Loss Pleases Wall Street

Lycos pleased but did not surprise Wall Street analysts with its third quarter performance, meeting expectations for revenues and net loss.

For the quarter, ended April 30, Lycos took in 132 percent higher revenues than the same period a year earlier, reporting $35.1 million coming in. Lycos also slashed its net loss by 60 percent, from $2.4 million, or 15 cents per share, before amortization and a one-time charge a year ago to $1 million, or 2 cents per share, before goodwill amortization this year.

The loss is also down 33 percent from 1999’s second quarter loss of $1.5 million, or 3 cents per share.

Lycos attracted 52 percent of all Internet users in the third quarter, to overtake powerhouse Yahoo! as the most popular search site. As reported, Lycos credits aggressive deal making in the period to increase its reach and its affiliations with established brands for the improved performance.

The deal-making continued this week with a joint marketing announcement with West Coast Video stores and a plan to add auctions to its site with the help of FairMarket, Inc., an auction site developer.

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