Despite its third fiscal quarter containing the abandonment of the largest acquisition deal involving a portal, Lycos Inc managed to stay reasonably focused and turn in a solid set of results. The Waltham, Massachusetts-based company claims to have surpassed Yahoo! Inc during the three months to April 30 to become the most visited portal on the net with 31.9 million unique visitors, according to Media Metrix’ report for April. It also announced a broad alliance with WebMD and a revenue-sharing agreement with Open Market Inc during the three months.
Aside from the numbers, Lycos has also announced that it will run its own auctions through an agreement with FairMarket Inc which will provide the underlying technology. In return Lycos will take a stake in FairMarket of up to 9%. At present it merely provides links to other company’s auction sites.
The company managed to beat Wall Street’s consensus for losses per share by one cent, recording losses of $0.02 per share, before any merger-related expenses, which were quite substantial. And in a show of confidence, management also announced a two-for- one stock split, effective some time after the Lycos shareholder’s meeting on July 15.
Net losses for the quarter ending April 30 were $13.3m, or $0.31 per share, after a $12.3m charge for amortization of goodwill, down from losses of $22.1m last time, which included a $16.3m charge for in-process research and development and a $2.3m goodwill charge. Revenues for the quarter were up 131.9% to $35.1m.
The agreement with USA was called off on May 12 after a lot of speculation that Lycos shareholder resistance would scupper the deal. The main protagonist to that end was David Wetherell, chairman of CMGI, the largest Lycos shareholder with about 20% of the company, who resigned from the Lycos board a month after the deal was announced on February 9 to find an alternative deal, which never materialized.
Other highlights in the quarter included the introduction of an MP3 search engine, the Lycos radio network, the belated introduction of personalization service to Lycos, which it heralded as a breakthrough yesterday, but which comes almost three years since Yahoo introduced My Yahoo!. Lycos also chose last quarter to introduce Lycos Clubs and a calendaring service, again later than most of the portals.
For the nine months, Lycos saw net losses of $30.7m, after $35.7m in goodwill write-offs and a $10.1m gain on the sale of an investment, up from losses of $21.6m the previous year, which included the $16.3m charge for in-process research and development mentioned above and $2.5m in goodwill write-offs. Cash and equivalents stood at $132.4m as of April 30. Nine-month revenue rose 144.1% to $90.4m. The results were released after the market closed, but during the day Lycos shares had risen to close at $4.4375, or 4.1% to $112.9375 and apparently carried on rising in after-hours trading.
