Lycos Internet sinks 20%, US arm files for bankruptcy protection

"US step down subsidiary, Ybrant Media Acquisition (YMA) has filed for Chapter 11 protection with US courts in order to create breathing room necessary to complete settlement talks on Lycos Inc (search engine) purchase," says the Hyderabad-based internet advertising company in its filing.

Shares of Lycos Internet (earlier known as Ybrant Digital (before that it was LGS Global)) are locked at 20 percent lower circuit at Rs 19.05 (fresh 52-week low) on Wednesday after its US subsidiary filed for bankruptcy protection. There were pending sell orders of 26,857 shares, with no buyers available, at 12:52 hours IST.

"US step down subsidiary, Ybrant Media Acquisition (YMA) has filed for Chapter 11 protection with US courts in order to create breathing room necessary to complete settlement talks on Lycos Inc (search engine) purchase," says the Hyderabad-based internet advertising company in its filing.

YMA, which is an acquisition vehicle that was used to buy and own Lycos Inc asset, has no significant operations other than related to Lycos Inc ownership, says the company.

Ybrant Media Acquisition bought search engine Lycos Inc from South Korea’s Daum Global Holdings Corp for USD 36 million in 2010. It has made USD 20 million first payment in 2010 towards purchase of Lycos Inc but then there has been difference of opinion on final amount due between seller and company.

"This filing for bankruptcy protection gives us necessary time and space to effectively continue discussions and reach a settlement on mode and amount of payment," says the company, adding this will not have any impact on current operations of the company.

Read more at: https://www.moneycontrol.com/news/buzzing-stocks/lycos-internet-sinks-20-us-arm-files-for-bankruptcy-protection_5897261.html

 

this shows how dangerous micro-caps can be. Lycos was one of the most talked about micro-caps in this forum. I remember I got several messages to buy Bronze Infra (do not know where the texts came from). The stock also ran a bit following bonus announcements but has since crashed to become a penny stock. These micro--caps are often operator driven. First hype is created around a stock. Then the stock prices rise. When retail investors buy the stock at higher levels the negative news is revealed and the stock crashes. Then after a while retail investors get frustrated and sell the stock at losses. Then again the prices are increased by creating a hype. Its a continuing cycle. In fact several boarders of this forum have contributed to this manipulation.

 

Any evidence to support this allegation?

A quick search throws up just 30 posts featuring the word Lycos... Maybe not more than 10 boarders posting - queries included.

 

Lycos Internet has issued clarification regarding the News "US arm files for bankruptcy protection."

Excerpts follow :



https://corporates.bseindia.com/xml...96591E_28B7_44E2_AEED_18787407D957_082350.pdf

 

I am just recollecting what I read. I admit "most talked about" was a wrong phase to use but 30 posts is not low either. There are a few people who deliberately discussed the stock here. What were their intentions ? As I said you can never be sure about anyone's motives. Applicable to me as well.

 

Well 30 posts in a forum with over 14000 posts and a handful members amongst 3000+ members is indeed small. Then not to forget the contents- many asking for advice and replies thereto, some offering pros and cons and info about the stock.

If you cant be certain of the intent you cannot conclusively accuse them of any wrong doing. So what's the available evidence since you have accused the boarders of contributing to this manipulation

 

Darth Ji,

First of all I am not answerable to you. As I wrote I have shared what I felt after seeing Lycos fate. Lycos internet WAS one of the recommended and discussed stocks in this forum. I really do not know how many boarders are there in this forum. I think only the admin can tell. Also 3000 members does not mean 3000 people may actually be members. I hope I am making sense.
But I do hope 3000 different people are actually members because the forum is informative in itself. In fact this post itself shows information need be positive to be helpful. Negative information is also helpful. Secondly look at the content of messages/posts. As you mentioned all the 14000 plus messages might not be necessarily be informative. In fact many of messages are actually off topic. hence not all 14000 messages maybe relevant for investment or buying stocks.Thirdly given the number of stocks it is certain that all stocks will be not be equally discussed. I did a search for Infosys. I found around 125 messages. Now you can conclude that 125 is also not a very large figure. But can you that conclude Infosys was not recommended or discussed. And finally I would reiterate that if a boarder is recommending or suggesting a stock which has poor fundamentals and is moving up on hype it is a 'contribution to manipulation". I may or may not be able to prove that but Lycos did come down crashing. So did Kitex garments, for e.g. It was recommended by high profile investors. Was it not ?

 

So is it that a stock cannot crack just because its recommended by high profile investors? Once successful always successful is it???

Further,

You may not be answerable to me. Is that also the case about the contents of your own posts as well.

Looks like no evidence to back up an allegation that boarders in here have contributed to the manupilation in the stock? Anyways I have made the point I wanted to ...... Just another case of baseless , unsubstaniated allegation. But I really wish we did have boarders with the "might" to be able to manipulate/ influence stock prices. Unfortunately these guys dont waste their breathe being boarders on forums.

And just fyi

Forum Statistics
Discussions:1,878
Messages:14,630
Members:3,360
Latest Member:Avinash Subramanian

 

So you do have information on this forum. I would rest my case at least on this issue of Lycos. I do not mean any offence. And at the end of the day people invest their own money and they themselves are accountable for their losses.
The central point of my argument was that micro-cap stocks are prone to manipulation. We have seen this again and again.
I am glad you have talked about my posts. I am surprised that I do not get any critique on my posts but they are most welcome. However I have made full disclosures. And I share both qualitative and quantitative aspects of company. In fact if there is a issue of concern I make sure I highlight it prominently to ensure the members are made aware of the risks.
I will not stop. In fact I have decided I will read this forum more extensively and whenever I see a stock with poor fundamentals being discussed I would share my ideas. Usually I do not follow micro-caps that much but I would try.

 

Ok....so lets now discuss why do we think the stock is manipulated...
The earning?
The case?
The bankruptcy filing?
Lets go step by step...
No audit report has specified that its earnings do not follow any accounting stds or are manipulative , so its beyond my expertise to know if they were manipulative. What I know is that they did not pay dividends, so dint apple for like 10 years , nor did the promoter take out a single penny out, ofcouse according to the annual report .
Next comes the case, see the lycos deal was done on the basis of accrual payments based on the revenue and when the revenue was more than expected , daum asked for more money which ybrant did not think was right, hence the case and the judgement was declared in 2014 itself and was of the same amount,so no extra panalty was imposed in the two years.
Now comes the bankruptcy filing. See we need to understand that just because a company has turnover and huge profits does not mean it shd hve ideal cash. And even if it has its in different countries from which bringing out is not easy, hence it has applied for bankruptcy protection to take out time for negotiation and raise money which I think can be done.
Above all if we even exclude all the profits made by yma(that has applied for bankrupcy) the EPs of fv15 still comes to around 5.
I am biased on this stock and will be coz I don't think ill be selling it ever.
Thanks.

 

Well said. This is the only bottomline. Each to himself- to bear the consequences or fruits of his actions. No point being a crusader of the lot which thrives in calling themselves 'retail/small investors'

Its best to be selfish. Get rich first and then see if you can be of help to others. Its not a lost or unknown fact that micro-cap stocks are prone to rigging. Everybody knows this. Yet most choose to ignore this. So why waste one's breathe.

 

Lycos was listed in BSE only earlier. They got listed in NSE last year and that's when all the hype was created about this company & now its done & dusted ... A big misconception people have is, when a BSE listed stock gets listed in NSE, they believe it has all of a sudden become a quality stock ... Need to go with the fundamentals always ...

 

Bankruptcy protection or chapter 11 in the US is no big deal, companies as big as GM have filed for chapter 11 and carry on business. Federal Mogul which is one of the highest valued stocks in the auto sector also was a ch 11 company. Anyway, the India business has very strong fundamentals. Fortune lists it in the next 500 list.

https://articles.economictimes.indi...s/64243785_1_rbl-bank-ratnakar-bank-inox-wind

 

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”