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What Google IPO Investors Can Learn From Lycos

The Motley Fool takes a look at how Google and its investors can learn from the decline of Lycos (which was just bought for $105 million by Daum).

Potential IPO hounds who haven’t yet been scared off by Google’s projected triple-digit share price, or its total valuation in the mid-$30 billion range, have yet another reason to fret. Yesterday, one of Google’s second-class rivals, Lycos, was sold by its parent, Terra Networks (Nasdaq: TRLY), to Korea’s Daum Communication for the bargain price of $105 million.

For context, recall that when Terra Networks first offered to buy out Lycos in 2000, it bid $12.5 billion. Fast-forward just four years, and the company has lost about 99% of its value. (Why, even your average Kia doesn’t depreciate that fast!)

There is one caveat to the depreciation story, but it’s a small one. Before the sale, Terra stripped out $435 million worth of Lycos’ European and U.S. Spanish-language assets, which it will hold onto at the behest of Terra’s parent company, Telefonica SA (NYSE: TEF). So call the depreciation 99%, or 95% if you prefer — either way, it’s a pretty big write-off.

Now, as anyone who has used Lycos’ email system can attest, the company is a truly substandard operation. I have an email account with the company myself, which I continue to use despite the site often being down inexplicably. The site’s unpopularity causes spammers, who swarm to Yahoo! (Nasdaq: YHOO) and Microsoft’s (Nasdaq: MSFT) Hotmail users, to treat Lycos like the cyber equivalent of desert wasteland — uneconomical even to send junk mail to. Hence, has become a de facto spam-free zone.

Category SEO
SEJ STAFF Loren Baker Founder at Foundation Digital

Loren Baker is the Founder of SEJ, an Advisor at Alpha Brand Media and runs Foundation Digital, a digital marketing ...

What Google IPO Investors Can Learn From Lycos

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