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Lycos numbers approach profitability

The search engine's quarterly report cuts losses and beats Wall Street estimates.

Lycos (LCOS) today beat Wall Street's expectations and narrowed its loss in its most recent quarter, leading some analysts to believe that Lycos is on track to reach profitability in less than a year.

The search engine company reported a loss of $1.3 million, or 9 cents a share, for the period ending April 30, compared to a loss of $1.59 million, or 13 cents a share, in the year-ago period. In the previous quarter, the company reported a loss of $2 million, or 15 cents a share.

Wall Street's consensus estimate was for a loss of 11 cents a share for the third quarter, according to First Call.

Year-to-year revenues jumped 277 percent to $5.85 million for the quarter. Revenue growth over the previous quarter was 17 percent.

"It was a strong quarter. They are very much executing on their business plan," said Paul Noglows of Hambrecht & Quist. "I think they'll be profitable by the end of the second quarter, which is January of 1998," he said.

Noglows also said that Lycos is "putting some distance" between itself and two of its competitors in the Internet search engine industry, Excite and Infoseek, and getting nearer to Yahoo, which is already profitable.

"I've got buys on Yahoo and Lycos," he said.

Lycos chief financial officer Edward Philip cited licensing and international expansion strategies as particular contributors, saying in a statement that the company is pleased with its progress in the year since it became a public company.

"Our licensing strategy continues to pay dividends for us as our deferred revenue grew to over $9 million during the quarter," he said.

In a coup for its international strategy last week, Lycos signed a deal with European media giant Bertelsmann to create and distribute navigation centers in 37 European countries. Lycos said it now has 27 licensing partnerships worldwide.

As for its other revenue stream, advertising, it said that more than 350 companies advertised on the Lycos site during the quarter.

Also during the quarter Lycos launched what it called its most significant advertising campaign to date.