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February 25, 1999


By CBR Staff Writer

Lycos Inc reported what may or may not be its last quarter as an independent company, depending on whether the deal for it to be subsumed into USA Networks Inc gets completed. There have been widely-reported misgivings about the deal on the part of lead Lycos shareholders CMG Information Services Inc, which following the plummet in Lycos’ share price after the deal was announced on February 8, issued a statement denying that it was going to vote against the deal, but that it reserves the right to reassess its position as developments unfold. There are also doubts about Lycos’ purchase of Wired Digital, which was announced in October 1998 and has yet to close. Lycos reported second-quarter net losses of $9.3m, after a $7.8m merger-related charge, against profits of $301,000 last time, on revenues that rose 142.4% to $30.6m. Without the charge, the loss would have been $0.03 per share, one cent better than Wall Street had predicted. Along with the merger charge, Lycos spent very heavily on sales and marketing during the quarter, which is understandable as it encompassed Christmas, which means commerce revenues for portals. It spent $18.0m on sales and marketing in the quarter, which is 59% of revenues. It launched an extensive TV campaign around its Go get it! slogan. The number most observers look for with portals is, of course, traffic and Lycos reported a 39% increase in daily average page views over the previous quarter, rising to 50 million per day, which the company says vindicates its multi- branded network approach. Lycos owns, among others, Tripod, WhoWhere, AngelFire, MailCity and hopefully, HotWired, HotBot,, Wired News and WebMonkey, if the Wired deal closes. During the quarter, Lycos launched AuctionConnect, entered into an agreement with IBM Corp to include a Lycos start page on browsers on its Aptiva desktops and signed a deal with Bertelsmann AG for its Books On-Line service in Europe. Six month net losses were $23.9m, after merger charges totaling $30.0m, against profits of $410,000 last time, on revenues up 153% at $55.3m.

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