UPDATE 2-Spain's Terra gains customers but
losses deepen
Reuters Company News - July 31, 2000 08:58
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By Dan Trotta
MADRID, July 31 (Reuters) - Terra Networks , the top Internet service
provider in Spain and Latin America, reported deepening first-half losses on
Monday despite an increase in customers, with its shares diving in the wake of
the news.
Terra, a unit of Spanish telecoms giant Telefonica and in the process of taking
over U.S. portal Lycos , piled up net attributable losses of 165.9 million euros
($153.3 million) in the first half, more than double the losses of 70.4 million
euros a year earlier on a proforma basis.
Its results sent Terra shares into a tailspin, closing 4.4 percent lower at 41
euros. The stock earlier fell more than six percent.
Analysts said the losses appeared to come from steep operating expenses in
advertising and marketing.
"The number of subscribers and page views look pretty, but for these
companies to regain their lost share value they are going to have to show better
results," said Felipe Gomez-Serrano, an analyst at Caja Madrid.
HONEYMOON ENDING
"The honeymoon isn't over yet but it's starting to end," he said, adding that
Terra revenues were better than he expected but the losses were worse than
forecast.
Terra shares have tumbled since peaking at an intraday high of 157.65 euros on
February 14, just before a worldwide decline in tech stocks, but were still more
than three times their debut price of 13 euros last November.
Terra also has suffered from the ongoing $12.5 billion all-share acquisition of
Lycos, as the market has considered it a high price to pay for the merged Terra
Lycos to become the world's third-largest Internet firm operating in 37
countries.
SALES, CLIENT BASE ON THE RISE
The good news was that Terra's first-half sales rose 178 percent to 83.6 million
euros ($77.26 million) on a proforma basis with help from higher advertising
and e-commerce income.
Terra said its subscriber base doubled during the first half of the year to 2.66
million customers, adding 174,000 new paying customers from January to June.
Non-paying customers grew 167 percent in the first half of the year, largely due
to new services in Brazil, Mexico and Chile, the company said.
The company, set up in late 1998 as Telefonica Interactiva, expects to turn a
profit in 2002.
Its rapid growth was engineered by former Telefonica Chairman Juan
Villalonga, who resigned last week amid a probe into alleged insider trading.
Villalonga's replacement, Cesar Alierta, has pledged to continue with all of the
parent company's pending strategic deals, including the takeover of Lycos. |
