Tech Industry

Lycos moves into the black

Lycos hits profitability for the first time since its 1995 launch, moving into the black sooner than analysts had anticipated.

Lycos (LCOS) today hit profitability for the first time since its 1995 launch, moving into the black sooner than analysts had anticipated.

With its first-quarter results, Lycos now joins the profitable ranks of Yahoo (YHOO), which has posted three quarters of profits this year. Excite (XCIT) may soon follow, having narrowed its losses for the past three consecutive quarters.

"Much of Wall Street did not expect Lycos to be profitable until the third quarter," said Paul Noglows, an analyst with Hambrecht & Quist. "I had them breaking even for this quarter, but not profitable until the second quarter."

Noglows cited Lycos' tight cost controls and growing revenues as driving forces behind its push into profitability. Noglows noted that Lycos' announcement of profitability did not come out of left field, as the search engine company has been working on its current business formula for some time.

But will Lycos' better-than-expected quarter give the search engine sector a rise looking forward?

"I think the good news was already out there," Noglows said. "The search engine stocks have been going up over the last few days. And the whole sector was strong today."

When Lycos posted a smaller-than-anticipated loss during the previous quarter, a number of search engines caught a pop in their prices. Lycos bounced back the next day with a rise of about 14 percent, while Excite jumped 17 percent and Infoseek (SEEK) rose 7 percent.

Lycos reported first-quarter earnings of $107,000, or 1 cent a share, compared with a loss of $2.8 million, or 20 cents a share, a year ago. In the previous quarter, Lycos reported a loss of $575,000, or 4 cents a share.

That first-quarter performance beat analysts' estimates of a loss of 3 cents per share, according to First Call.

Revenues, meanwhile, rose to $9.3 million, up from $3.7 million a year ago and a 20 percent jump over the previous quarter.

The company increased the number of advertisers to 460 in the first quarter, from 400 in the previous quarter. Additionally, 80 percent of those advertisers were from consumer brand companies, rather than high-tech firms.

Lycos also marked the quarter with several strategic alliances, such as a three-year agreement with Barnes and Noble to promote books online.

The company also was selected as the exclusive developer and host of Microsoft's Active Channel Guide for Internet Explorer 4.0.