Four years after paying $12.5bn (£6.9bn) for web portal Lycos, Spanish internet provider Terra Lycos is selling its US subsidiary for no more than $115m.
Lycos has been trying to compete in the general-purpose web portal market, and Jupiter Research analyst David Card said Terra Lycos had probably accepted that the field was now dominated by Yahoo, America Online and MSN.
Card said Lycos had come nowhere near to breaking into the top tier in terms of advertising revenue and traffic. "The difference between the top guys and everybody else is pretty striking."
According to Card, rather than trying to compete against formidable opponents, Lycos would have been better off going after a specific type of user and becoming a niche player.
Lycos is still an attractive buy, especially for a non-US outfit, although they will have to figure out how to expand or differentiate the business.
Terra Lycos will disclose the buyer's name when both parties reach a definitive agreement. Before the sale, some Lycos assets will be transferred to Terra Lycos, including its stake in Terra Networks USA and Lycos Europe.
The Terra Lycos web properties ranked seventh in the top web destinations in terms of unique visitors in the US in June, according to the ComScore Networks rankings.
Juan Carlos Perez writes for IDG