Web search engine company Lycos Inc has struck a deal to acquire privately-held online community Tripod Inc for approximately $58m in stock. The deal combines one of the top navigation sites with a youth-oriented web-hosting outfit that currently boasts about one million members. It also unites two of the top ten most visited web sites […]
Web search engine company Lycos Inc has struck a deal to acquire privately-held online community Tripod Inc for approximately $58m in stock. The deal combines one of the top navigation sites with a youth-oriented web-hosting outfit that currently boasts about one million members. It also unites two of the top ten most visited web sites and effectively creates what Lycos claims to be the fifth most popular site on the web – in terms of combined visitors – after AOL.com, Netscape.com, Microsoft.com and Yahoo.com. Tripod, a 56-person company based in Williamstown, Massachusetts, claims more than 100 million page views per month. Terms of the agreement make Tripod a wholly-owned subsidiary of Lycos which will continue to operate as a separate entity, although content and services will be tightly integrated and multiple links will exist between the two sites. The agreement comes at a time when consolidation is rampant in the industry, with partnerships such as that of Yahoo! Inc and GeoCities Inc, who struck a similar deal last month that included Yahoo! taking a minority stake in GeoCities (CI No 3,319). Other recent activity has seen Excite Inc linking up with Prodigy Internet Services Corp and Yahoo! Inc and MCI Corp joining forces in content-access arrangements (CI Nos 3,332 and 3,325). Lycos sees this acquisition as unique, though, with the integration of navigation and personalized content with community-style web hosting and discussion groups catering to the prized 18-34 year- old market. Bob Davis, chief executive of Lycos, says he could have partnered with anyone for technology or content, but the acquisition was carried out to increase the company’s revenue possibilities. Davis is looking at the instant addition of 48% more page views as a boom to advertising and commerce opportunities, and says the phones are already abuzz with interested advertisers. Lycos currently claims 800. Ed Philip, chief financial officer at Lycos, says the acquisition should be accretive within a few quarters, even though Tripod isn’t currently profitable. Philip’s simple formula for this is to leverage our sales force with their page views. The company will take the majority of an undisclosed acquisition charge during the current quarter, ending April 30. Tripod, for its part, says it had seen interest from every major search engine company but felt that Lycos was its best bet. Bo Peabody will remain chief executive of Tripod, while Dick Sabot, the chairman of Tripod, becomes a member of the Lycos board. Lycos says the acquisition does not mean the end of its existing partnership with GeoCities, for which it has created a directory of web pages hosted by GeoCities. The main reason for the continuation of the relationship is that Yahoo! simply can’t perform the same service for GeoCities, according to Philip. In November, Lycos reported a profit for the first-quarter – its first ever – posting net income of $107,480 on revenue that rose 153% to $9.3m (CI No 3,293). First Call is expecting similar net income for the recently-completed second-quarter. Lycos shares closed unchanged at $41 on Tuesday.