Lycos Shares Slide Despite Strong Net On Fear Over Deal
Lycos Inc. reported better-than-expected results for its fiscal third quarter, but its shares plunged more than 20% amid concerns about the proposed takeover by Spain's Terra Networks SA.</br></br>Lycos shares closed at $57.6094 apiece on the Nasdaq Stock Market, down $15.0156 and almost $40 below the proposed takeover price of $97.55. The sharp drop was highly unusual, and suggests that some Lycos shareholders are worried that Terra isn't a good strategic partner. It may also be a bet that Terra shares will fall further, which could lower the price that Lycos shareholders will receive under the pact.</br></br>Separately, Waltham, Mass.-based Lycos reported that net income for the period ending April 30 hit $122.4 million, or $1.05 a diluted share, aided by a $270.2 million gain from investments. That reversed a net loss of $13.2 million, or 15 cents a share, in the year-earlier quarter. Operating profit totaled $7.9 million, or seven cents a share, higher than the five cents a share analysts were expecting.</br></br>The Internet portal reported that revenue more than doubled to $78.6 million, compared with the year-earlier $35.8 million and higher than the $75 million analysts had been expecting. Revenue from advertising, a key yardstick on the Internet, more than doubled to $51.6 million.</br></br>Paul Noglows, of Chase Manhattan Corp.'s Chase H&Q unit, called it a "good quarter," but pointed out that most investors are focusing on the Terra deal.