Terra Lycos CEO Bob Davis has resigned.
Bob Davis, former CEO of US portal Lycos, has left the merged Internet company Terra Lycos following weeks of speculation about a power struggle with the Spanish board. The company, majority-owned by Spanish incumbent telco Telefonica, will now be run from Spain by its chairman Joaquim Agut. The announcement came as Terra Lycos issued its year-end results, showing total revenues up to $526 million from $281 million and a total loss of $348 million – better than analysts had expected.
Despite the good results, the markets didn’t take kindly to Mr Davis’ departure, bringing Terra Lycos shares down 9.5% as the news was announced. After all, Mr Davis had successfully built Lycos up from a startup in 1995 to the US’ top three portal by the time of the merger and was expected to play a major role in transforming the Terra side of the business from a simple ISP to a major content provider.
Nonetheless, investors may be being rash. Mr Davis is clearly a skilled business developer. But time and time again, mergers between international companies are hampered by differences in management style and focus. DaimlerChrysler, for instance, is only starting to deal with major structural problems at the US Chrysler subsidiary now executives from the parent company are in charge. And Americans aren’t the only people capable of good management. Terra itself was rapidly built up from just being Telefonica’s ISP subsidiary to being the Spanish-speaking world’s dominant portal.
Terra Lycos’ strategy to provide portal services in Terra’s core markets is going well. Its US operation is also still successful. It now needs to build further mindshare in the Spanish-speaking world and Europe outside Spain and Germany, which will require non-English language content – not Mr Davis’ specialty. With Telefonica’s enormous financial resources behind it and a proven management team, Terra still stands a realistic chance of taking AOL on at a global level. The US giant, after all, is still relatively weak outside its home market.
