>Goldman Conference: Lycos CEO Stays Cool
>
>By George Mannes
>Staff Reporter
>
>
>Attempting to clear up any confusion about his merger with USA Networks
>(USAI:Nasdaq), Lycos (LCOS:Nasdaq) CEO Robert Davis gave a quick
>presentation at the Goldman Sachs Technology Investment Symposium.
>
>Davis stressed that the new company has as good a chance as anyone to
>become "the dominant e-commerce vendor in the world in a very short time."
>The stock market gave the deal a thumbs down, sending Lycos shares tumbling
>33, or 26%, to 94 1/4.
>
>In his presentation, Davis spent a lot of time talking about those assets.
>In particular, Home Shopping Network, a company that is present in 70% of
>cable households, has 2,000 telemarketers and is capable of shipping
>200,000 items a day. To survive in a world of low margin or even no margin
>or negative margin e-commerce, the ability to operate on such a large scale
>is crucial, Davis said.
>
>Davis also talked about synergies, for example, printing a company's Web
>address on some of the 70 million tickets that TicketMaster (TMCS:Nasdaq)
>sells annually, or having HSN telemarketers pitch a company's products to
>customers already on the phone buying something else.
>
>He admitted he'd had a tough time explaining the deal to investors, as
>evidenced by Lycos' big drop today. From the dialogue in the
>question-and-answer session following Davis' presentation, it was indeed
>clear that people had a hard time following the transaction, which is
>expected to close in four to six months.
>
>Partly to blame for the confusion were the stock warrants to be granted to
>Lycos shareholders that could increase their holdings under a certain set
>of circumstances following the deal; people also came up with different
>numbers for the proper value of USA Networks' market cap. But he recalled
>that Lycos's share price has dipped each time the company has announced an
>acquisition of late. In other words, today's big drop wasn't a new
>experience for him. "Today's challenge is that it takes time to tell the
>story," Davis said.
>
>Edison Chu, vice president of New York-based Digital Century, said that he
>thought TicketMaster and Home Shopping Network were impressive operations
>for an online company to gain. "It would be very difficult for another
>company to emulate," he said. "Those were assets that were really
>unmatched." (Digital Technology does not have any holdings in the companies
>involved in this deal, he said.)
>
>But, Chu said, the challenge for USA/Lycos would be to integrate all the
>different brands. "I see potential problems of them bringing the assets all
>together," he said, estimating it would take more than a year after the
>deal closes. "My sense is, it's going to take a lot of time," he said.
>_____________________________________________________________________________
>Wrong! The Net Trap
>
>By James J. Cramer
>
>Which company will be the first to say "Hey, we have no Net here! We're NOT
>the dot in .com. We have no Web work!" Soon Broadcom (BRCM:Nasdaq) will rue
>the day it put a .com on its name. And Webster Financial of Connecticut
>will have to change its name to Torrington Savings or something.
>
>Yeah, we are in the backpedaling stage, big time. Even as people at the
>Goldman Sachs Technology conference were joking about how anything .com was
>working better than enterprise software, personal computers or semi
>equipment, the die had been cast. The mania had been crushed and the
>margined players were biting the dust. Nastola is the word.
>
>Network Solutions' (NSOL:Nasdaq) broken secondary spoke tomes (a broken
>secondary is one that doesn't hold the print price where the deal was
>sold). But it was the Lycos (LCOS:Nasdaq) betrayal that cut the heart out
>of the move. Short of Excite (XCIT:Nasdaq) merging with the Hula Hoop
>company, there couldn't be a worse combination. Wonder if Barry Diller had
>some TheStreet.com Internet Sector index puts on when he pulled this one
>off? Could he be that brilliant?
>
>So why is tech being pulled down too? First, we are stuck with the guilt by
>association problems. Sun Microsystems (SUNW:Nasdaq) worked hard to be a
>Net company, so of course it will go down 7 when the Net unwinds. IBM
>(IBM:NYSE) so linked itself with the Web that it now has the double whammy
>of being a Net hybrid with bad earnings! Eeesh. Dell (DELL:Nasdaq) and
>Cisco (CSCO:Nasdaq) have done their best to link their fortunes to the Net,
>too.
>
>So we have to unwind that. And it will be unwound. More pain ahead. Again
>purists are probably saying "Well, heck, why not short Cisco?" Go ahead. I
>am not that much of a nihilist. I am comfortable buying Cisco down. Not
>aggressively. But it is on the buy side of my blotter, not the sell side.
>
>For those who cannot take pain from the long side, this will be a trying
>period. To me it is a necessary period. The bulls need valuations to be
>more in whack instead of out of whack. The bulls need a market broader than
>just the Janus 20. The bulls need the Net froth taken out to make this
>market safe. And more important, the bulls need to have fewer bulls!
>
>That's the process we are undergoing now.
>
>The market is going from being severe overvalued to being overvalued. We
>have seen it happen hundreds of times in the last 20 years. It will happen
>hundreds of times more.
>
>It's why I am glad I have some cash and why I expect I will need it.
>
>See you on "Squawk."
>
>******
> |
