Earnings: Lycos Problems Persist; Can Disposals Set Things Straight?
By Robert Andrews - Tue 26 Feb 2008 01:45 AM PST
In yet another brutally embarrassing earnings report, one-time super portal Lycos Europe’s annual 2007 losses quadrupled from 4.6 million euros (£3.4 million) to 18.2 million euros (£13.7 million) on an EBITDA basis. Revenue fell seven percent, too, from 82.4 million euros (£62.1 million) to 76.7 million euros (£57.8 million). Q4 revenue was down even more, by 22 percent to 18.3 million euros (£13.79 million).
Holland-based Lycos has proved itself unable to keep pace with its former portal rivals in recent years and unable to make much even from the current online ad boom. Bluntly, the main reason for the losses - “the negative advertising revenue development of (our) own products”. Stating the obvious: “This is not in conjunction with the overall market development.”
The site (32.1 percent owned by Telefonica (NYSE: TEF), 20 percent by Bertelsmann) has been racing to offload investments - including its shares in number-two Czech portal Seznam (64.8 million euros) and Tom’s Hardware publisher Best Of Media (1.2 million euros) as well as selling its Swedish ISP business to Aller Svenska (11.5 million euros). Only these disposals helped turn 2006’s 1.7 million euro net loss in to a 40.1 million euro net profit (£30.22 million). It integrated its Pangora and Mentasys online shopping companies but consequently recorded an 17.6 million euro (£13.26 million) impairment loss in “Google-related traffic”.
Lycos knows its big problem is developing compelling enough in-house products, so it continues to point to its Lycos iQ Yahoo (NSDQ: YHOO) Answers clone (succeeding in Germany) while stretching its R&D legs on European-funded research projects. Other interesting launches include Spanish mobile blog site MMS-EA, Kewego-powered video platform JubiiTV; it even relaunched homepage builder Tripod last year.
But the company’s schizophrenic structure still looks problematic - a separate entity from Lycos US, it spent $5.2 million last year to renew its right to use the name yet entered the US market using an entirely different moniker; Jubii. In ‘08, it will focus on improving ad revenue, shopping and its German domain name registration business United Domains.
