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Terra Networks Holds Lycos Talks

May 12, 2000

MADRID, Spain (AP) _ Terra Networks, the Internet subsidiary of Spanish telecommunications giant Telefonica, said Friday it is in talks with U.S. Internet company Lycos Inc..

Terra, which has a strong presence in Latin America but is struggling to make inroads in the United States, did not say if the contacts were aimed at establishing a strategic alliance or a full-blown merger.

Brian Payea, a spokesman for Lycos at its Waltham, Mass. headquarters, said the company would not comment on the reports.

The Spanish stock market regulatory authority suspended trading in Terra shares for several hours Friday after the Spanish business daily Expansion reported the two companies were in talks. After trading resumed, Terra shares were up 4 percent to 66.2 euros ($60) as of midday.

Terra is one of Europe’s largest publicly traded Internet companies. Its stock price has soared more than 1,000 percent since it went public late last year, although it has since fallen back in line with high-tech stocks in both Europe and the United States. Even so, Terra is up 460 percent from its IPO level.

However, like many Internet companies, Terra loses money. On Monday the company reported a first-quarter net loss of 11.66 billion pesetas ($63.8 million).

Lycos is one of the top Internet portals in the United States, with its sites _ including Lycos and Hotbot _ visited by more than 33 million people each month. The Waltham, Mass.-based company lost $52 million on $135.5 million in revenue in 1999.

Shares of Lycos surged 19 percent, or $8.62 1/2, to $54 in trading Thursday on the Nasdaq Stock Market. In midmorning trading on Friday, its shares were changing hands at $58.75, up $4.75 or nearly 9 percent.

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