Lycos lights up search sector
Look out, Yahoo and Excite. The search race isn't over yet.
Just when everyone thought the battle of the search engines was won, Lycos (LCOS) beat expectations and put a bit of umph into the sector.
After Lycos beat expectations for its fourth fiscal quarter yesterday (See related story), just about everyone benefited.
Lycos' stock gained about 14 percent, or 4-1/4 points, to 33-7/8, from yesterday's close of 29-3/4; Excite gained 17 percent to 17-3/8 from yesterday's close of 14-13/16; and Infoseek (SEEK) gained about 7 percent to 7-7/8.
But the biggest player, Yahoo, bucked the trend; it lost 1/16 to close at 55-13/16.
Yahoo, which has been trading at high levels, may have encountered some profit-taking by investors after its competitor came out with a strong earnings announcement.
The slight downturn was nothing serious, given that Yahoo is a market leader, said Andrea Williams, an analyst with Volpe Brown Whelan.
And she remained bullish on other search engines as well.
Williams upgraded Lycos to "strong buy" from "buy," and raised her price target to $45 from $30 a share, based on the strength of the fourth quarter and the potential from partnerships.
Shaun Andrikopolous, an analyst with Alex. Brown, raised his revenue estimate on Lycos to $40 million for fiscal 1998, up from $32 million.
"We are encouraged that Lycos has strongly entered the commerce market with this solid partnership [with Barnes & Noble]," he said.
When big, established companies make that kind of deal with the online world, it brings attention to the Internet and potential to such search engines as Excite and Infoseek, analysts said.
"Navigation companies have something very significant to offer partners, and when you can attract a brand that is as prominent and well known as Barnes & Noble, the No. 1 bookseller in the world, that says a lot about what you have to offer," said Williams.
Infoseek, which has been very quiet in recent months after undergoing a management shakeup, is preparing to relaunch itself with a marketing push and a new look.
"Infoseek is a company that most people would say is out of the race, but the fact that Lycos moved up the ranks gives hope to Infoseek. All have something very valuable to offer," she said, adding, "People expect good news to come out of the company."