WORTH REPEATING.....................
Terra Networks road show
Que pasa, some say of Spanish portal
By Thom Calandra, CBS MarketWatch
Last Update: 4:10 PM ET Nov 11, 1999
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NEW YORK (CBS.MW) -- Que pasa at the latest road show?
That's right. At a New York City road show for
Telefonica S.A.'s Terra Networks S.A. Internet offering, CEO Juan
Perea Saenz de Buruaga was blunt about the Spanish company's strategy.
Investors who saw the Terra Networks (TRRA: news, msgs) presentation
said Perea clearly is willing to buy Spanish-language Web sites to broaden
his company's appeal to Hispanic Americans. Terra is a leading provider
of Internet access and Web services -- in Spanish and Portuguese -- in
Spain, Brazil, Mexico, Peru, Chile and Guatemala and Argentina.
Spanish telecommunications company Telefonica (TEF: news, msgs)
intends to float as much as 30 percent of Madrid-based Terra Networks
on Nasdaq and in the Spanish stock market. The Internet service
provider's U.S. registration statement for the upcoming initial public
offering clearly states that the Spanish-language portal will reach out to
"the U.S. Hispanic market and several additional Latin American
countries, including Colombia and Venezuela."
"Perea said acquiring a presence in the U.S. Hispanic market was a
priority," said Darren Chervitz, a Jacob Asset Management analyst who
was at this week's presentation. (Terra Networks, whose ticker will be
TRRA on Nasdaq, hopes to sell 22 million shares; Goldman Sachs,
Lehman, J.P. Morgan and Credit Suisse First Boston are leading the
offering.)
The company's registration statement with the Securities and Exchange
Commission says, "We intend to use our multi-local/global approach to
obtain a leadership position as a portal operator in each market where we
operate . . . extensively advertising our brand names to become industry
standards for Spain, Latin America and the U.S. Hispanic community."
There aren't many publicly-traded choices for grabbing a piece of the
Hispanic Internet audience in the United States. Shares of Quepasa.com
Inc. (PASA: news, msgs) might benefit from the Terra Network CEO's
intentions.
There are, after all, just two Internet U.S.-listed companies that serve
Spanish and Portuguese speakers. One is StarMedia Network (STRM:
news, msgs), whose freshly-minted shares had their day in the Latin sun,
then wilted. Still, StarMedia's market capitalization is almost $2 billion.
Another company, Yupi.com, is privately held.
Quepasa.com of Phoenix, Ariz., when it first sold shares on Nasdaq in
June, had little in the way of revenue. The company now has more than
120,000 users. Market capitalization is $100 million.
Indeed, Quepasa.com's user base has been growing rapidly. During the
company's third quarter, the number of registered users for the Web site
grew 128 percent from the previous quarter. That's strong sequential
growth. Grammy Award winner Gloria Estefan is www.quepasa.com's
spokesperson -- and an investor in the company.
Revenue for Quepasa.com is almost nil. And the company is losing money
hand over fist -- $21.1 million of red ink thus far this year.
Terra Networks, meanwhile, has about 700,000 customers and delivers
roughly 270 million page views per month. The company is Spain's
biggest Internet service provider. Terra has been buying companies across
Latin America.
More importantly, Terra has deep pockets. The company has grown its
Internet reach by buying sites such as Ole, a Spanish portal, ZAZ of Brazil
and Infosel of Mexico. Plus, Terra in the United States is building a Web
portal with Internet service and telephone services provider IDT Corp.
(IDTC: news, msgs), parent of Internet telephony company Net2Phone
(NTOP: news, msgs).
The IDT-Terra service is designed to reach some of the 30 million
Spanish speakers in the United States, the companies said earlier this
month. After this article was published, Quepasa.com and Net2Phone on
Thursday afternoon said they would create a messaging center on
Quepasa.com. The service, called "Conexion," will let users send and
receive voice mail, faxes, e-mail and telephone calls.
"A company like Quepasa could be a very cheap way to buy traffic in this
country," said Chervitz.
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