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Terra Lycos Q2 sales jump

Reining in losses

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Terra Lycos, the Spanish/American ISP-cum- Net portal turned in Q2 sales of E180 million ($157.46 million), 34 per cent up on Q2, 2000. The company also pulled a rabbit out of the hat, with revenues E10-15 million higher than its previously published forecasts for the quarter (E165-170 million).

Losses before interest, tax, depreciation and amortization were down slightly to E65 million, against E69 million in Q2 last year.

At the EBITDA level Terra Lycos is inching towards profitability- the company is still working its way through (non-cash) massive post-acquisition goodwill write downs. Cost-cutting in the quarter saw expenses reduced by seven per cent, partly from synergies claimed through the integration of Lycos, the US Internet portal, acquired for $6.5 billion.

The company said its geographic spread and variety of revenue stream enabled it to withstand economic slowdown.

The revenue split was 62 per cent from its media business (mostly Lycos); and 38 per cent from Internet access. Online ad sales edged up 4 per cent, a good performance, considering the bloody state of the US Internet advertising market, while Internet access revenues jumped 152 per cent on Q2, 2000.

Terra Lycos says it averaged 460 million page views daily in June, up 7 per cent on Q1. Uniques were up 4 per cent from March to June 2001, reaching 103 million users.

Terra's Internet access business in Spain and Latin America put in a good performance, gaining 190,000 paying subscribers net in the quarter. Almost 40 per cent of these were ADSL subscribers.

Terra Lycos says the results show the company is making good progress to converting its free subscriber base to a paid-for model. Currently it has 4.3 million subscriber on its books, 3 million of whom do not pay. Presumably, many or most of the freeloaders will drop out, as Terra Lycos fades out the free service. But this will help the company reach its goal of hitting operating profit by Q2 next year.

Terra is ultimately owned by Telefonica, the Spanish phone company which is probably Europe's least indebted major telco. As such it can afford to be somewhat more relaxed about getting into the black than many rivals. These results show that it has every chance of turning profitable within its stated target. ®

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