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Lycos grows, takes charges

Acquisition costs weigh heavily on the search firm during its most recent quarter, but revenue and e-commerce deals boost its revenue.

Acquisition charges weighed heavily on Lycos during its most recent quarter and pushed the search engine company further into the red, but revenue and e-commerce deals nevertheless boosted its revenue.

Lycos also announced today that it intends to file with the Securities and Exchange Commission tomorrow for a secondary offering of up to 3.45 million shares of common stock, valued at $238 million based on today's closing price of $69 per share.

The filing said 2.45 million shares will be sold by the company--which will generate $169 million for Lycos, excluding charges associated with the offering--and that 1 million shares will be sold by CMG@Ventures.

As Internet companies scurry to expand their offerings in order to keep users at their Web sites for longer periods of time and for more reasons, many are on the prowl to acquire companies that offer complementary services.

For the quarter ending in April, including merger charges, the company reported a whopping net loss of $91.5 million, or $5.90 a share, compared with a loss of $1.3 million, or 9 cents a share, for the same quarter a year ago.

Excluding amortization and one-time expenses, net loss for the quarter would have been $2.4 million, or 15 cents per share. A consensus of analysts were expecting a loss of 18 cents per share, according to First Call.

Part of the charges recorded during the quarter were associated with two acquisitions. In April, the company bought WiseWire and its proprietary technology for directory-building on the Internet in a $39.75 million stock deal. In February, it purchased online community Tripod for $58 million in stock.

Lycos's revenues for the quarter grew nearly 160 percent, to $15.1 million, up from $5.9 million reported for the same period a year ago. Revenue increased 20 percent over the quarter ending in January 1998.

The company said it experienced a 22 percent increase in advertising revenues, driven by strong growth in traffic. Additionally, it announced several major electronic commerce agreements during the quarter, resulting in growth in deferred revenues of over $56 million.

During March alone, Lycos signed deals valued at $30 million.

On the international front, the company expanded its European joint venture with Bertelsmann by announcing new alliances in Japan and Korea, countries that Lycos defined as "two of the fastest growing Asian markets."

As part of its effort to build out its offerings, Lycos also acquired an equity interest in PlanetAll, a provider of contact management technology that allows friends to share a common database of addresses, phone numbers, and calendars. The company also acquired a minority ownership position in GlobeComm, a free email service.

Lycos announced earlier this month its official entry into the Internet "portal" market through a three-year agreement with AT&T WorldNet to develop and offer Internet-based consumer communications services.