Shares in web portal Lycos Inc dipped $1.938 to close at $57.938 Tuesday after the company met Wall Street earnings expectations for the first quarter of fiscal 2000 but analysts voiced concern about bottom line prospects going forward and several investment banks lowered earnings estimates for the full year.
While revenue for the quarter of $56m was well ahead of most banks’ $49m-$50m estimates, Warburg Dillon Read and Merrill Lynch were disappointed by weak sequential growth in registered users, which rose only 3 million to 35.4 million. Another negative cited by analysts was a greater-than-expected dilutive effect from the recent acquisition of Quote.com Inc. Consequently, WDR has lowered its EPS estimate for the year to $0.11 from $0.16, while Merrill dropped its projection from $0.19 to $0.11. Credit Suisse First Boston lowered its EPS target to $0.09 from $0.13.
All three banks upped their revenue outlook for the year, however, by at least $17m to a new range of $253m to $257m. CSFB cited the company’s increasing ability to turn its traffic into faster revenue growth. While sequential page view growth exceeded 17% to 82 million, quarter-to-quarter revenue growth was 24%. The bank also said the LycoShop initiative appears off to a fast start and it is optimistic about its second-quarter potential.
