Optimism Abounds at Lycos

Looking ahead after the collapse of its merger with USA Networks, Lycos overflowed with optimism, touting record e-commerce deals, promising more big ones soon and celebrating its new position as the #1 Net portal.

“Business is stronger than ever, and we are poised for tremendous growth,” said Bob Davis, Lycos president and CEO. “There is no question that our single-minded focus on delivering the best interactive products to our users across multiple leading brands is the cornerstone of our achievements.”

Lycos (Nasdaq: LCOS) also predicted third-quarter results, expected Tuesday, would meet Wall Street expectations. Revenue is expected to rise to $32.8 million ($US) from $30.6 million the previous quarter, while the loss shrinks from 8 cents to 3 cents a share.

E-Commerce Booming

Davis pointed to third-quarter e-commerce deals, totaling a record $200 million, with the likes of Audio Book Club, Electronic Newsstand, Auto Connect, Web MD and Online Retail Group. Other major e-commerce deals are expected in the coming weeks, Davis said.

The surge in e-commerce comes along with record traffic. Lycos edged out perennial leader Yahoo! by gaining 51.8 percent of market share, and nearly 32 million unique monthly visitors, Media Metrix reported. Lycos’ online communities, Tripod and Angelfire, now have more than 6.75 million registered users and are adding more than 40,000 new members daily.

Lycos also has suggested it would waste no time looking into major stock acquisitions after USA Networks abandoned the acquisition bid in the face of intense opposition from Lycos shareholders. The deal would have created a $22 million e-commerce superpower, combining Lycos with USA’s Home Shopping Network and Ticketmaster Online CitySearch.

Analysts expect Lycos will become a merger target by mid-summer (Lycos agreed that it would pay USA Networks $35 million if it signed a deal to be acquired by another company before July 15).

Stock Rebounds

Lycos stock had fallen precipitously amid opposition to the USA Networks deal among investors who insisted Lycos should retain its Net focus instead of diving headlong into retail. But Lycos stock soared on news, initially reported last Monday, that the USA Networks deal was off.

Some, but not all analysts, shared Lycos optimistic view. Jeffries raised its rating from “hold” to “buy.” But Needham & Co. downgraded Lycos from a “buy” to a “hold.”

Lycos, which has built a major presence in the U.S., Europe and Asia, is best-known for its popular “premium” sites, including Lycos.com, Tripod, WhoWhere, Angelfire, MailCity, Hotbot, Wired News and Webmonkey.

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