lycos internet pros n cons

Lycos internet

Market cap of 1100cr
FY14 sales of 1990
Np of 340cr
EPs of 7.2rs
Debt 70
Growth20%
Consolidated P.E of 3.2



Company of q3 fy15 sales of 720 Cr, np of 125 Cr, eps of 2.5rs for q3, cmp is 24 rs..
Market cap of 1200cr

Expected Fy15 sales of 2300cr np of 430cr
promoters hold 39%,Fii 20%
Public 14%

pros...
1.digital marketing,
2 programmatic advertising
3 Mobile video advertising,
4 soft services,
5 IOT, new products smart band
6 top publisher in US
7 represents Microsoft in south America region, tie up with google n yahoo
8. Growth rate of 30% in digital marketing
9. focus on new technology
recently acquired sms app mysms cloud base platform... it's Austria company having 30 million user base
10.EBITA of 17%
11. Consolidation of all legal entities to cayman to increase operational income
12. Tied up with Apollo to launch ecommerce B2b model already in progress
13. Overseas listing possible, not ruled out in a year r two
14.big plans to develop IOT n cloud based solutions.
pls refer con calls from company site..
15 revamp of Lycos.com.. Which is first ever internet profitable company in world



Cons
1.Cash flow model to be redefined,
2. No devident from 4 yr
3 No big investment from mutual found r investors

hope multi bagger in next quarters..

Pls share ur views...

 

only issue is their US arm has filed for bankruptcy, but the Indian firm is doing very well and extremely undervalued

 

Hidden RISK in LYCOS.
Lycos owe $36 million(approximately 250 CR) to Daum on Lycos DEAL. If you see Lycos balance sheet it has negligible amount in cash and bank. Majority of the money had been mentioned in "Work under progress". If they have to pay 250 CR then either they have to dilute the stake or take DEBT. Total Risk liabilities will be : 1. A debt of 250 CR 2. Fund raisers for recent acquired of bright com and mysms etc are through private investor. These private investors are on an urge of exit and Reddy himself told in an interview recently to mentioned that they will facilitate their exit. But he didnt mention that who will replace those investors and invest money. If they don't find any other investors then more debt need to be raised(equivalent to acquisition amount) 3. After the 250 CR daum impact they will need to Raise money for working capital under debt Seeing the above factors I would suggest to stay away from this stock until the information on "how are they planning to pay DAUM" and "who will invest money after the exit of private investors" is made public by Lycos management. If the above reasons are true then the stock will be available between 2-3 RS "Sudar Industries Ltd" also walked in the same path of Lycos. Study it to get more clarity on what Lycos will become.

 

The issue with Lycos is solved and now I believe the share is ready to move up.

The stock price were beaten down because of a court case Ybrant digital(parent company) was fighting with the rival company DAUM.

What was the issue - Ybrant(parent company) bought Lycos from Daum with 20 million dollars down payment and rest of the payment would be some X times the revenue. So the pending payment came out to be 36 million dollars.

Lycos refused to pay this amount on the grounds of manipulation of revenues by DAUM appointed Lycos CEO and hence files a court case.

They lost the case and court ordered to pay 36 million dollars to DAUM. Ybrant files bankruptcy to get time to file a counter case on DAUM.

Later bankruptcy court asked Ybrant and Daum to settle the case outside the court and moved Ybrant out of bankruptcy.

Then the US court appointed a sheriff to get the transaction done.

But Lycos Contributed only 1.2% to the overall profit and 5.6% to the net asset of Ybrant. So paying 250 Cr (36 million dollars) was a bad deal for Ybrant as well as the investors.

Finally court ordered Ybrant to hand over the share of Lycos it owned(56%) to DAUM.

So now the company has been renamed as Brightcom, which is their signature brand.

This court case was the reason of fear to beat down the share prices to Rs 5-6 and now this issue is solved the share price has a good chance to reach its intrinsic value of 60 Rs – 70 Rs at 10 PE.


“Comments and other perspectives are welcome”