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Technology Stocks : Lycos -- Ignore unavailable to you. Want to Upgrade?

To: Tim McCormick who wrote (915)	8/20/1998 9:07:00 AM
From: .com	Respond to of 2439

from briefing.com: 09:00 ET ****** LYCOS, Inc (LCOS) 69 3/8. Profits are down from year earlier levels, reversing the recent trend of higher profits, but that won't make any difference. After the close Wednesday, Internet search engine Lycos (LCOS) reported a fiscal fourth quarter loss of $0.09 per share. This was the biggest loss in five quarter, and worse than the year earlier loss of $0.04 per share. In fact, LCOS had received accolades from Wall Street for "having turned the corner" three quarters ago when they eked out a $0.01 per share profit in their fiscal first quarter. That was followed by a profit of $0.02 per share in the second quarter. The third quarter came in at a loss of $0.15 per share, and now the fourth quarter is a loss of $0.09 per share. That might not seem like a great trend, but the stock is indicated higher. This, of course, is the result of the fact that Wall Street was forecasting an even larger loss of $0.13 per share, so LCOS beat estimates by an apparently excellent 4 cents. LCOS also did report a 152% increase in year-over-year quarterly revenue. That is in line with recent quarterly increases and is without question excellent. Yet, the market seems to hold LCOS and other Internet companies to a very soft standard when it comes to actually reporting profits. The stock is up from about 30 a year ago, so it is impossible to say that the lower year-over-year profits are in the stock price. Instead, it is clear that the market is basing LCOS stock price on long-term earnings expectations (hopes?). So, why should the market react favorably to one quarter's profit numbers. It probably shouldn't, but that is the way the game is played these days. Beat estimates and the stock price goes up. But investors should realize that the headline of LCOS beating, or even "blowing out," estimates, is virtually meaningless. If this quarter's profits were important, the year-over-year decline would be cause for concern. Instead, this is still just a speculative Internet play where valuation is very difficult to assess.