Lycos Inc. (Nasdaq: LCOS) met Street estimates in its first quarter and
predicted strong growth ahead.
On Monday, the Internet portal firm reported first quarter $700,000, or 1
cent a share, on sales of $56 million.
First Call consensus expected Lycos to earn a penny a share in the quarter on
sales of around $50 million.
Last quarter, Lycos raked
in $600,000, or 1 cent a share, on sales of $45.1 million.
According to First Call's survey, analysts predict Lycos net income of 3
cents a share in the second quarter and 16 cents a share in the fiscal year. But
in a conference call Monday afternoon, Lycos executives suggested that Wall
Street should expect more profit growth.
"Our outlook for this fiscal year has increased quite substantially," CEO
Robert Davis told analysts. "We're as bullish as we have ever been about our
operating model going forward. ... We think there's great upside, with the
strategy we've employed, with regard to earnings."
The $56 million in first quarter sales marks a 126 percent improvement
compared to the year-ago period when it lost $2.5 million, or 3 cents a share,
on sales of $24.8 million.
"The results we just reported today in Q1 are pretty close to what we were
expecting at a full year annualized run rate," Davis said, noting the company's
fiscal 2000 target of roughly $230 million for revenue.
Lycos officially recorded $120 million in deferred revenue at the end of the
quarter, including $80 million that will be recognized in the next 12 months,
said Edward M. Philip, CFO and chief operating officer. That deferrred figure
excludes all advertising revenue and some e-commerce business.
"If you add those two pieces, the visibility that we have next quarter, two
three quarters out, is pretty amazing," he said.
Despite the upbeat forecast, Lycos doesn't get the stock market recognition
it deserves, company executives said. Based on audience reach, page views and
12-month trailing revenue, competitors such as Yahoo! (Nasdaq: YHOO) and America
Online (NYSE: AOL) trade several multiples above Lycos, Davis said.
"There's still a substantive valuation gap between ourselves and many of our
competitors," Davis said.
Lycos shares closed up 15/16 to 59 7/8 ahead of the earnings report but
surged as high as $63 a share in after-hours trading. The stock remains well
below its all-time high of 72 11/16, reached early this year when Lycos was the
subject of acquisition talks.
First quarter traffic on the Lycos network jumped 17 percent from the fourth
quarter, when it recorded an average of 70 million page views a day, company
The company's expansion has largely come through acquired properties -- nine
in the last 18 months. "You should continue to look for acquisitions as a growth
vehicle for the company," Davis said.
In an unrelated announcement, Lycos officials said it will kick off a
year-long advertising using the "Go Get It" tagline and its black retriever
introduced in 1998. This week, the new campaign begins with television
advertisements during ABC’s Monday Night Football. Ads will also appear on
national cable outlets, including MTV, VH-1, USA, TBS, E!, ESPN and Fox. Print
advertising featuring a $5 million dollar giveaway contest will appear in USA
Its shares surged up to a 52-week high of 72 11/16 in April after falling to
a low of 23 3/4 in November. The stock split 2-for-1 in July.
Twenty-two of the 24 analysts tracking the stock maintain either a "buy" or
"strong buy" recommendation.