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Terra in Lycos alliance talks
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May 12, 2000: 5:32 a.m. ET
Spanish ISP confirms talks with U.S. portal as 1Q revenue leaps
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LONDON (CNNfn) - Spain's Terra Networks said on Friday that it was in alliance talks with Lycos, which a media report said could lead to a merger of Europe's second-largest Internet company by market value and the U.S. Web portal.
Spanish newspaper Expansión reported Friday that Terra was in talks which could lead to a merger with Lycos, prompting stock market regulators to halt trading in the Internet service provider's shares.
"Talks are currently going with Lycos with no definitive agreement worth announcing so far and no guarantee for the time being that one can be reached," Terra said in a filing to Spain's National Securities Market Commission.
Terra shares rose to  65 before the suspension, having closed at 63.50 Thursday, valuing the company at around 12 billion. Lycos (LCOS: Research, Estimates) shares soared 8-5/8 Thursday to close at 54 as it climbed in tandem with a broad rally in Nasdaq composite stocks.
Terra's stock soared after Spanish telecom operator Telefónica last November sold 24.9 percent of its online subsidiary, luring investors with the prospect of the firm's rapid expansion in Latin America. While Terra shares have fallen nearly two-thirds since the start of the year, it remains three times the size of Lycos by market capitalization.
Terra Friday reported it lost 11.66 billion pesetas ($63.31 million) in the first quarter, although revenue and subscriber numbers grew strongly. The company did not disclose its loss in the comparable period a year earlier.
Revenue rose to 37 million, up 125 percent from the year-ago period and a 20 percent increase from the last quarter of 1999.
 Terra said it had a subscriber base of 1.67 million at March 31, a rise of 50 percent since the end of 1999 and up sixfold from a year earlier.
Advertising revenue jumped 860 percent to 6 million from a year earlier. Terra said revenue from e-commerce contributed 2.3 percent of total sales. Investors in Web service providers typically watch for growth of income from e-commerce, as the company's ability to generate revenue from sources other than users' subscriptions is regarded as a key to its future profit potential 
-- from staff and wire reports
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Terra Networks
Lycos
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