The company’s diversity in geographical markets and revenue sources allowed Terra Lycos to offset an adverse situation in the online advertising market. During this first quarter, 69% of total revenues stemmed from the media business, and 31% from access.
Loss before interest, taxes, depreciation and amortization (EBITDA) as of March 31, 2001 was 76 million Euros. This represents -43% of total revenues, an improvement for EBITDA of 26 million Euros or 26% over the fourth quarter of 2000. This result strengthens a trend that began in the third quarter of 2000, when EBITDA was -71% of revenues.
Operating expenses were reduced by 21% over the previous quarter. Cost savings were achieved without affecting growth as a result of the capitalization of synergies created by the merger of Terra and Lycos, and the implementation of process improvements in the company’s resource management.
Net loss for the first quarter of 2001 was 174 million Euros, and is due primarily to the goodwill amortization resulting from the acquisitions made in 2000. This quarterly amortization in the amount of 128 million Euros, which represents no cash outflow, will continue to have a negative book impact over the next quarters, and will represent a significant increase in 2001 over 2000, when the amount for the entire year was 253 million Euros.
We are very pleased with our results and activities for the quarter, which have further strengthened our business, said Joaquim Agut, executive chairman of Terra Lycos. Our EBITDA margins have improved 28 percentage points in the past six months. We will keep focusing our efforts on improving the company’s profitability quarter after quarter, capitalizing on growth opportunities in the markets in which we are present.
During the first full quarter operating as a single company, Terra Lycos performed an assessment of its organization and operations in order to leverage the synergies derived from the merger between Terra and Lycos. In addition, the company is reducing approximately 15% of its workforce.
