Terra finds possible buyer for Lycos

The Spanish telecommunications conglomerate that bought former Waltham-based Internet company Lycos Inc. for $12.5 billion four years ago says it has found a possible buyer who could pay less than one hundredth of what Lycos sold for less than five years ago.

In a regulatory filing in Spain, Terra Networks SA said it expected to get $95 million to $115 million for Lycos's US operations. A Spanish newspaper, Expansin, identified the potential buyer as a South Korean company it did not name.

Terra Networks had no comment beyond a bare-bones disclosure made to the Comisin Nacional del Mercado de Valores, a Spanish agency analogous to the US Securities and Exchange Commission. It did not say when it hopes to close the deal, which would not include Terra Lycos's European operations or the Terra.com US Spanish language portal. Terra Networks is owned 72 percent by Telefonica, the top Spanish telephone company.

In May 2000, at the crest of dot-com stock mania that had propelled both companies' shares to epic highs, Terra Networks offered $12.5 billion for Lycos, which it planned to use as a springboard for expansion to Spanish-speaking Web surfers throughout the Western Hemisphere. While Lycos comprised an Internet search engine and a collection of niche sites like Angelfire.com, Tripod.com, and the Raging Bull financial site, its then-chief executive, Robert Davis, successfully portrayed -- and got a valuation for -- Lycos as a major Web portal in the same league as Yahoo, MSN, or America Online.

On the day the deal closed, Telefonica chief executive Juan Villalonga, who took the role of chairman at the renamed Terra Lycos, predicted the company would become ''a new media powerhouse, ideally positioned as a global leader."

Within two years, Terra Networks had written off all the goodwill premium on the Lycos deal, reflecting the utter collapse in dot-com valuations. Terra Lycos has yet to turn a profit but hopes to next year. Terra Lycos's Waltham operations have shriveled to about 200 people, less than one-third the workforce there in 2000.

Two months ago, Terra Networks tapped the Lehman Brothers investment bank to shop Terra Lycos around to prospective buyers, at an asking price Spanish business media pegged at $170 million.

Peter J. Howe can be reached at howe@globe.com.