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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end? -- Ignore unavailable to you. Want to Upgrade?

To: Big Dog who wrote (967)	2/10/1999 3:43:00 PM
From: Sir Auric Goldfinger	Read Replies (1) \| Respond to of 3543

Lycos Shares Fall on Concern Takeover Crimps Value (New York, Feb. 10 (Bloomberg) -- Lycos Inc. shares fell as much as 18 percent after USA Network Inc. agreed to pay less than what investors expected for the No. 3 Internet search directory. Lycos fell 4 5/8 to 89 5/8 in late trading. Earlier, the stock fell as low as 77. Since the combination was announced yesterday, Lycos shares have tumbled as much as 39 percent. The shares had more than doubled this year on optimism that Lycos would be purchased for a fat premium. Some investors are disappointed in yesterday's offer and believe USA Networks is getting the better end of the complicated transaction. Investors are also worried that growth rates at Lycos will slow as it is saddled with higher costs associated with merging some of USA's businesses with Lycos. ''The idea of partnering with real electronic commerce companies like Ticketmaster is interesting but you dilute the Internet aspect and the open-ended growth rate (of Lycos) by doing so,'' said Paul Cook, who manages the Munder Capital NetNet Fund, which owns 43,000 Lycos shares. USA Networks, the media company headed by entertainment industry veteran Barry Diller, plans to combine Lycos with its cable-TV Home Shopping Network, Ticketmaster ticketing service and Internet operations such as Ticketmaster Online-Citysearch Inc. and First Auction to focus on selling goods and services over the Internet. Lycos attracts users by offering free news and services such as electronic mail and home pages. The companies said the combined business would be worth $22 billion. Investors aren't buying that valuation. The two-day decline has cut about $2 billion from Lycos' market value. That implies a value of about $15.6 billion for the new company. Lycos Sued Lycos still has to convince disappointed investors that the combination is a smart move. A shareholder today sued Lycos in Delaware Chancery Court for failing to invite other bids to evaluate the company's fair market value. ''If the stocks continue to react as badly,'' CIBC Oppenheimer & Co. analyst Henry Blodget said in a note to investors. ''Lycos and Mr. Diller may well call the whole thing off -- an action that might cause the Lycos stock to pop back up.'' CIBC's Blodget cut his rating on Lycos to ''hold'' from ''buy.'' CMGI Inc., an Internet venture fund, owns 20 percent of Lycos and supports the transaction. The Lycos-USA proposal comes after a flurry of transactions involving Internet companies, usually resulting in rich premiums for shareholders. High-speed Internet access provider At Home Corp., for example, agreed to buy Lycos rival Excite Corp. for $7.5 billion in stock, a 57 percent premium, on Jan. 19. No. 1 Internet directory Yahoo! Inc. agreed to acquire Geocities, the largest provider of personalized web pages, for $3.56 billion in stock, a 52 percent premium, on Jan. 28. ''People are a little disappointed because Excite and Geocities got these huge premiums when they were purchased,'' said Dalton Chandler, an analyst with Needham & Co. ''But if you look at the run up in Lycos shares after those deals, the premium was built in there already. People had been expecting them to get bought out for a while.'' Lycos shares had risen 45 percent from the time the At Home- Excite transaction was announced until its close Monday. USA Networks fell 1 5/8 to 40. Ticketmaster-City Search, 60 percent-owned by USA Networks, fell 4 3/4 to 37 1/2. Seagram Co. Ltd., which owns 45 percent of USA Networks through a limited liability company, rose 1 to 48 11/16.