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Lycos ‘ripe acquisition opportunity' - analyst

Lycos Inc. Wednesday pointed to rising circulation figures for its network of Web sites as evidence of its success. Others, though, said success must be measured in other ways, especially in the wake of the At Home/Excite merger.
Written by Matthew Broersma, Contributor

Lycos said the latest numbers from Media Metrix shows its reach -- a measurement of how many visitors a particular site gets -- has jumped 15.4 percent since November, and now nearly equals that of top-ranked Yahoo Inc. Lycos said its reach was 46.5 for December, compared to 48.2 for Yahoo.

Some industry observers say the numbers are only important if more users make Lycos a more attractive acquisition target. "What is (Lycos') ultimate goal here? To be a stand-alone company generating profits into the millennium? Probably not," said Jim Balderston, an analyst at Zona Research Inc. "They're a ripe acquisition opportunity."

Though such speculation has circulated before, Lycos has not publicly acknowledged looking for a buyer. The company could not be reached for comment for this story.

With competition intensifying, most of its rivals have paired off with big, established companies that could help them survive into the next decade. Infoseek Corp., Snap.com, Netcenter (run by Netscape Communications Corp.) and Excite have all followed this path. AltaVista is owned by Compaq Computer Corp. While Yahoo stands alone, its market capitalisation of nearly $30 (£18.3bn) makes this unlikely to change any time soon.

Those deals put Lycos' claims of success in a different light, analysts say. No longer does it compete with other portals, but against @Home (and AT&T), Walt Disney Co. and NBC, respectively. That fact alone makes it likely that Lycos will consider selling out to an established company, probably either an Internet service provider (such as a telecommunications company) or a media company, with its cross-promotional opportunities. In either case, a buyer would want not just lots of users, but lots of loyal users, analysts said; in other words, a strong brand.

So far, Lycos has done a pretty good job of tying together its "network" of properties, including Wired Digital, Tripod and others, into a single unit, according to industry-watchers. But, it's "difficult to call at this point" whether these manoeuvres will strengthen the Lycos brand, according to Derek Brown, an analyst at Volpe Brown Whelan & Co. in the US.

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