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Terra Lycos logs $2.2B loss

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MADRID, England (Reuters) -- Spanish Internet company Terra Lycos on Wednesday reported a record 2.01 billion euro ($2.16 billion) year loss in 2002 as it took a 1.43 billion euro writedown to clean up its balance sheet.

Shares in Terra rose four percent as analysts welcomed the decision to clear the decks.

"With international accounting rules, they would have had to account for (the Lycos portal acquisition) eventually. It's much better to get it out of the way now when it has very little impact on future profits,'' said Alexandra Lord, Internet analyst with BNP Paribas in London.

Terra, which is 39-percent controlled by Spanish telecoms giant Telefonica, said its core loss (EBITDA) narrowed 48 percent year-on-year to 120 million euros in 2002, in line with analysts' expectations.

Revenues in 2002 were 622 million euros, a 10 percent fall from the previous year and slightly exceeding analysts' estimates. The company blamed a slump in the value of Latin American currencies for harming its revenues from the region.

Without any charges and applying the same tax credits as it received in 2001, the net loss would have been 423 million euros, the company said.

Terra said the charge was composed of 857 million euros to write down goodwill, mainly from its 2000 merger with U.S. portal Lycos, and a further 453 million euros to revert a tax credit.

Analysts said the steep charge reflects what many already knew -- Terra paid well over the odds in acquiring Lycos near the peak of the dot-com boom in 2000.

Lycos, the once high-flying American Web portal, has been hit particularly hard by the downturn in online advertising and has been a drag on Terra's bottom line for the past two years.

Broken down by sector, revenues from Terra's media operations slumped by 20 percent to 359 million euros, while its Internet access and services businesses boosted revenues by seven percent to 262 million euros.

Total operating costs meanwhile decreased 22 percent to 438 million euros.

A Reuters poll of six Internet analysts predicted that Terrra would post a net loss of 428 million euros, an earnings before interest, tax, depreciation and amortisation (EBITDA) loss of 119 million euros based on sales of 618 million euros.

Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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