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

To: Platter who wrote (1237)	12/2/1998 2:48:00 PM
From: Platter	Respond to of 2439

Seem investors are taking note of this recent report. ."LYCOS INC. (LCOS) .More of the same from the Internet world: a misleading earnings report that no one will care about. After the close yesterday, search engine Lycos (LCOS) reported that per share profits excluding amortization, acquisition charges, and a one-time gain on securities was -$0.06 per share. This is the figure that is to be compared to analyst estimates, and it beats that by a penny. A careful look at the press release, however, shows that in the data table, operating income is specifically listed. It shows a loss of $26,672,565 million, which comes out to a loss of $0.64 per share. Operating income (or loss) is what most companies talk about, but not in the Internet world. The issue here is not the one-time gain or acquisition charges, but the amortization. Amortization is an operating expense that reflects the purchase price of an acquisition spread out over a number of years. This is not the cost of paying the investment bank or other one-time charges. It is the cost of buying the company and its goodwill. It is unquestionably an operating expense and reported that way for all companies. However, Internet companies such as Lycos and Amazon and others have been buying other companies at high prices (using their own pricey stock), then taking huge amortization charges, and putting out earnings reports that downplay this expense item by listing earnings excluding them, or listing pro-forma earnings, which exclude them because the amortization charges were not there last year. When Merck or GE buys a company, they don't do this, but Internet companies do. The market seems to think this is fine. However, for sticklers, LCOS reported a large operating loss. "excerpt From Briefing.com