Lycos once again put up for sale
Price is expected to be fraction of earlier figure
boston.com
By Robert Weisman, Globe Staff
April 29, 2004
Web portal Lycos Inc., snapped up by a Spanish conglomerate for $12.5 billion in stock at the height of the Internet boom four years ago, is being put up for sale again. But this time the Waltham operation figures to fetch only a fraction of that May 2000 sales price -- probably $200 million to $400 million.
Current owner Terra Lycos, the Internet arm of multinational Telefonica SA, last month tapped the Lehman Brothers investment bank to explore a potential sale of its US flagship site, two people briefed on the plans said yesterday.
Among prospective buyers to whom Lycos is being shopped are several West Coast search companies, including Google Inc., Yahoo Inc., and Ask Jeeves Inc.
Lycos now employs about 200 people in Waltham, down from about 1,100 at the time of its sale to Terra. In February, it outlined plans to rebrand itself as a collection of specialty websites focused on personal connections. Executives said they would ask users to pay for new content and services revolving around relationships, careers, finance, health, blog-building, and other social networking fare.
Miguel Garzon, a Terra Lycos spokesman in Madrid, wouldn't confirm yesterday that his company was exploring a sale of the US operation. Its hiring of Lehman Brothers was first reported on the CNET News.com website. "As far as Lycos US goes, there are rumors from time to time," Garzon said. "We never comment on rumors."
Lehman Brothers spokeswoman Kerrie Cohen also declined to comment, as did spokeswomen for Google, Yahoo, and Ask Jeeves.
Lycos, launched in 1994 with technology developed at Carnegie Mellon University in Pittsburgh, was one of the original Web portals and engineered the fastest initial public offering in history in 1996. The portal, which included such staples as Angelfire, Tripod, and Raging Bull, was among the most visited Internet content sites at the time of its sale.
Terra sought to use Lycos as a springboard to build up its global business, especially its Spanish language Web offerings.
Even before the sale closed, however, the value of Internet properties had plunged, beginning a technology decline that continued into 2003.
With the expected IPO of Google, interest in Internet and search properties is again growing, but finance professionals said yesterday that Lycos would be likely to sell in the range of $200 million to $400 million this time around -- not the lofty premiums of the dot-com era.
Tripod founder Bo Peabody, who sold his site to Lycos in 1998 and became Lycos's vice president of network strategy until the sale to Terra, said another sale could be good for Lycos as well as a buyer. Peabody said the decision to put it on the market was a recognition that an entrepreneurial company would be better positioned than a conglomerate to capitalize on Lycos as the market heats up again.
"They've had good management on the ground in the US," said Peabody, now managing partner at the Village Ventures investment firm in Williamstown. "They've kept up with the trends in the online advertising and subscription markets. They've really been doing what they can, given the environment that they've been operating in."
Robert Weisman can be reached at weisman@globe.com.
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