Filed by Terra Networks, S.A.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Lycos, Inc.
Commission File No. 000-27830
terra [graphic omitted] lycos
One Team, One Mission
Safe-Harbour Statement
This presentation contains forward-looking statements within the meaning of the
"safe harbour" provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on management's current expectations or beliefs
and are subject to a number of factors and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. The forward-looking statements contained in this presentation
address the following subjects: future financial and operating results and
efficiency; future industry, revenue and customer growth; future internet
penetration rates; and the timing and benefits of the merger.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: the risk that
Terra's and Lycos' businesses will not be integrated successfully; costs related
to the merger; failure of the Lycos stockholders to approve the merger;
inability to further identify, develop and achieve success for new products,
services and technologies; increased competition and its effect on pricing,
spending, third-party relationships and revenues; inability to establish and
maintain relationships with commerce, advertising, marketing, technology, and
content providers; difficulties in having the internet accepted as an
advertising medium; the growth of free internet access in many markets; adverse
economic trends; and the effect of any future acquisitions.
For a detailed discussion of these and other cautionary statements, please refer
to Terra's filings with the Securities and Exchange Commission, including the
Risk Factors section of Terra's F-4 filing, as amended, initially filed on June
27, 2000 and Lycos, filings with the Securities and Exchange Commission,
including the section titled "Factors Affecting the Company's Business,
Operating Results and Financial Condition" of the Management's Discussion and
Analysis in its Form 10-K for the year ended July 31, 1999 and the Risk Factors
section of Lycos' S-3 filing that became effective in March, 2000.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE BUSINESS COMBINATION TRANSACTION REFERENCED
IN THE FOREGOING INFORMATION BECAUSE IT CONTAINS IMPORTANT INFORMATION. Copies
of the joint proxy statement/prospectus and other documents filed by Terra and
Lycos with the Commission are available from the SEC's Public Reference Room at
450 Fifth Street, N.W. Washington DC 20549, telephone 202-942-8090. The joint
proxy statement/prospectus and these other documents may also be obtained for
free from Terra.
Agenda
1. Introduction
2. Vision
3. Strategy
4. Global Leadership
5. Branding, Audience and Content
Coffee Break
6. Wireless Opportunity
7. Financial
8. Summary
Q & A
Four Powerful Companies Join Forces
LYCOS (logo) terra (logo)
Bertelsmann (logo) Telefonica (logo)
A Global Powerhouse if Born
terra [graphic omitted] lycos
All the Benefits, None of the Liabilities
Growth ----> Fastest in industry
Content ----> Proprietary content
Culture ----> Internet-centric
Distribution ----> Global reach
Operations ----> Limited overlap
terra [graphic omitted] lycos
Our Vision
[graphic of the globe omitted]
Globalisation Convergence Profitability
terra [graphic omitted] lycos
Our Vision
To be the
most visited online
destination in the
world
Proven Integration Model
"One Team Committed to Customer Success"
[graphic of 3 overlapping circles omitted] [graphic of circle with 6 arrows
pointing to middle circle of
values]
Seamless Organisation Change --> Values
Communications --> Values
Culture Change --> Values
Simultaneous Process Change --> Values
People Change --> Values
Operational Efficiency --> Values
Speed
Fast paced change on simultaneous fronts to
take advantage of "Window of Opportunity"
terra [graphic omitted] lycos
Terra Lycos Integration Values
o Organise for speed
o Financial responsibility and accountability
o Boundary less thinking . . . sharing best practices
Profitable Growth
Common Internet Culture
o Similar employee profit
o User focus
o Agile
o Aggressive competitor
o Experienced integrators
An Experienced Management Team
Executive
Chairman
Joaquin Agut Legal
| Cristina Lamana
|
Strategy Counsel------------------------------Audit
| Antonio de Esteban
|
| People Development
| Carmen Casares
|
CEO
Bob Davis
|
|
|
CFO COO Corporate Corporate Human
Ted Phillip Abel Linares Development Communications Resources
Jeff Bennett Madeline Mooney John McMahon
Industry Leading Revenue Growth
o EBITDA positive Q4 2001 o Long-term revenue mix:
o 85% Media
o 15% Access
80% Growth
$97m $280m $500m $900m
--------------------------------
CY 1998 CY 1999 Projected 2000 Projected 2001
o Pro-forma calendar year revenues for Terra and Lycos as if they were
combined for all periods presented
Source: Historical results based on Terra Lycos Management Reports. Projected
2000 and 2001 based on Terra Lycos Management Projections
Investment Highlights...
o # 1 Global Footprint
o # 1 Revenue Growth
o # 1 Wireless Platform
o # 4 World-wide Access Provider
o Leading Cash Position
o Market's Leading Convergence Vehicle
...All With A Clear Path to Profitability
Note: Management estimates relative to Terra Lycos peer group
Agenda
1 Introduction
2 Vision
3 Strategy
4 Global Leadership
5 Branding, Audience and Content
6 Wireless Opportunity
7 Financials
8 Survey
The Market is Evolving...
Global Footprint >> << Local Market Execution
[GRAPHIC OMITTED]
Content >> << Access
Revenue Growth >> << Operating Margin
Globalisation, Convergence, Profitability
terra [graphic omitted] lycos
...And We are Well Positioned
Global Footprint >> << Local Market Execution
o Deep penetration in 40 o Strong local management
major markets
[GRAPHIC OMITTED]
Content >> << Access
o Strong global brands o Nearly 5 million subs
o Deep content portfolio o Wireless platform
Revenue Growth >> << Operating Margin
o Industry leading growth o Best practices
Globalisation, Convergence, Profitability
terra [graphic omitted] lycos
Globalisation: The Opportunity Before Us
Europe
[map omitted]
19%
69%
99%
North America
[map omitted]
11%
42%
41%
Asia
[map omitted]
36%
77%
79%
Latin America
[map omitted]
39%
86%
43%
2000-2003 CAGR Internet Users
2000-2003 CAGR Ad. Spending
2000-2003 CAGR e-Commerce Spending
Source: eMarketer as of June 2000 and Jupiter Communications 2000
Globalisation Strategy: Extend Leadership
Canada Europe
#1 #4
[map omitted] Korea
#1
US Hispanics United States Asia
#1 #4 #2
Japan
#2
Latin America
#1
o Consolidate markets through acquisition
o Leverage state-of-the-art global delivery platform
o Exploit local expertise
Source: Media Metrix and Terra Lycos Management
Convergence: On The Leading Edge
Media Communications
o Bertelsmann o Telefonica
o Telefonica Media o Telefonica Moviles
o Endemol [terra lycos logo]
Interactive Content
o Terra
o Lycos
Convergence Strategy:
Maximise Value Chain
Providing Aggregating Offering Monetising
Access Audience Rich Traffic
Content
o Acquiring o Best-of-breed o Focus on o Sell
users services verticals advertising and
attract traffic increases user commerce to a
o Fostering and facilitate loyalty and segmented
customer circulation duration audience
loyalty
terra [graphic omitted] lycos
Profitability Strategy
o Large and efficient sales force
o Unique global platform
o Strong management controls
o Market consolidation
o Operating efficiencies
o Significant economies of scale
o Best practices
Measurement and accountability
Globalisation
o Establish #1 or #2 position in each local market
o Be the undisputed leader in worldwide page views
Convergence
o Integrate Bertelsmann and Telefonica Media content
o Exploit the market's broadest range of access offerings
Profitability
o 80% revenue growth in 2001
o EBITDA positive by Q4 2001
Agenda
1. Introduction
2. Vision
3. Strategy
4. Global Leadership
5. Branding, Audience and Content
6. Wireless Opportunity
7. Financials
8. Summary
[graphic of the continents omitted]
Building on a Great Foundation
o Over 7 billion page views per month
o Nearly 5 million access subscribers
o 60 million registered users
o 91 million unique visitors
o $3 billion in cash
o Over 3,000 advertising partners
o More than 5,000 stores
Source: Terra Lycos Management
Global Leadership
[graphic of North and South America omitted] [graphic of Europe, Asia, Korea &
Japan omitted]
Canada #1 Europe #4
Korea #1
US Hispanics #1 United States #4 Asia #2
Latin America #1 Japan #2
Source: Media Metrix and Terra Lycos Management
US Market
A Growing and Profitble Market
[graphic of maps of North and South America, Europe, Asia, Korea and
Japan omitted]
United States
2000 CAGR% 2000-03
---- -------------
o Internet Users 122m 11%
o Ad. spending $6bn 42%
o E-com spending $37bn 41%
Source: eMarketer as of March 2000 and Jupiter Communications 2000
United States
Closing the Gap
Reach Growth in Average Pages per Month
- ------------------------------------------ ------------------------------------
Yahoo - 64% Terra Lycos - 95%
AOL - 63% AOL - 41%
Microsoft - 63% Yahoo - 12%
Terra Lycos - 42% MSN - N/A
Source: Media Metrix, as of July 2000 (all domains, home/work)
United States
Key Accomplishments Key 18 Month Objectives
- ------------------------------------- -----------------------------------------
o Growth in operating margins, o Capture #1 reach position
EPS and cash
o 46% increase in user loyalty o Leverage European wireless
metrics platform into US
o Industry leading traffic growth o Monetise Bertelsmann content
o Integration of 5 companies o Integrate Terra content
o Leading position among US o Continue to build US Hispanic
Hispanic community market
Source: Terra Lycos Management
Latin America
Fastest Growing Market Worldwide
[graphic of maps of North and South America, Europe, Asia, Korea and
Japan omitted]
Latin America
-----------------------------------------------------------------
2000 CAGR% 2000-03
o Internet Users 16m 39%
o Ad. spending $163mn 86%
o E-com spending $1bn 43%
Source: eMarketer as of June 2000 and Jupiter Communications 2000
Commanding Leadership
[graphic of North and South America omitted]
US Hispanic - #1 (portal)
Mexico - #2 (access) #1 (portal)
Central America - #1 (access) #1 (portal)
Peru - #1 (access) #1 (portal)
Brazil - #2 (access) #2 (portal)
Chile - #1 (access) #1 (portal)
Argentina - #3 (portal)
Access = dark oval
Portal = light oval
Source: Terra Lycos Management
Latin America
Key Accomplishments Key 18 Month Objectives
- ------------------------------------- -----------------------------------------
o 16 countries in 14 months o Maintain and grow leadership
position
o Page view growth of 298% o Launch Lycos products
o Revenue growth of 180% o Expand #1 wireless position
o Reach of over 80% in Brazil o Grow broadband services
and Mexico
o Strong alliances with leading o Leverage US advertising and
media groups commercial alliances
o Improve process efficiency;
transfer best practices
Source: Terra Lycos Management, including internal estimates
Europe and Asia
Joint Venture Strategy
o Think global -- act global
o Joint ownership with local market leaders
o Strong partner funding of operations
o Market share and value driver
European Market
A Combination of Size, Growth and Wealth
[graphic of maps of North and South America, Europe, Asia, Korea and
Japan omitted]
Europe
-----------------------------------------------------------------
2000 CAGR% 2000-03
o Internet Users 85m 19%
o Ad. spending $1bn 69%
o E-com spending $7bn 99%
Source: eMarketer as of June 2000 and Jupiter Communications 2000
Pan-European Franchise
[graphic of Europe omitted]
Norway
UK
Sweden
Denmark
Holland
Germany
Belgium
France
Switzerland
Spain
Italy
Source: Terra Lycos Management
Europe
Strong Market Position
Reach Growth in Unique Visitors % (a)
- ------------------------------------------ ------------------------------------
Yahoo - 42% Terra Lycos - 199%
MSN - 36% MSN - 152%
AOL - 28% Yahoo - 99%
Terra Lycos - 25% AOL - 63%
T-Online - 23% T-Online - 60%
(a) Annualised growth between October 1999 and July 2000
Source: Media Metrix, as of July 2000 for Europe. European figures only
consider UK, Germany and France includes "at home" users
Europe
Key Accomplishments Key 18 Month Objectives
- ------------------------------------- -----------------------------------------
o Raised $650m in IPO for Lycos o Growth position in France, Germany,
Europe Italy, UK and Scandinavia
o Lycos.de overtook Yahoo in o Pan-European launch of Hotbot
Germany and Fireball
o Launched Comundo in Germany, o Expand wireless platform
France, Netherlands, Italy and UK
o 90% reach in Spain o Leverage US best practices
o Grew annual revenues by 271%
Source: Terra Lycos Management, including internal estimates
Asian Market
Key Growth Market of the Future
[graphic of maps of North and South America, Europe, Asia, Korea and
Japan omitted]
Asia
-----------------------------------------------------------------
2000 CAGR% 2000-03
o Internet Users 38m 36%
o Ad. spending $470m 77%
o E-com spending $15bn 79%
Source: eMarketer as of June 2000
Extended Reach in Asia
[graphic of map of Asia omitted]
Korea - Apr 99
Japan - Jun 98
China - Apr 00
Hong Kong - Apr 00
Taiwan - Apr 00
India - Jun 00
Philippines - Jul 00
Malaysia - Jan 99
Singapore - Dec 99
Source: Terra Lycos Management
Asia
Key Accomplishments Key 18 Month Objectives
- ------------------------------------- -----------------------------------------
Japan:
o #2 portal o Grow market share in Japan and
China
o Raised $32m in strategic o Maintain and grow leadership in
financing with Kadokawa Korea
o Launched Lycos internet o Invest aggressively in content and
magazine distribution partnerships
Korea: o Enhance China business scope
o #1 portal
o 8 million unique users
o #1 in community with 2m tripod members
Rest of Asia:
o Launched sites in China, India,
Hong Kong, Taiwan, Singapore,
Malaysia, and the Philippines
o Launched wireless portal
Source: Terra Lycos Management
Agenda
1. Introduction
2. Vision
3. Strategy
4. Global Leadership
5. Branding, Audience and Content
6. Wireless Opportunity
7. Financials
8. Summary
Terra Lycos Network
A Global Family
of Brands
Multibrand Strategies Dominate
Media.....
Bertelsmann/ AOL
Gruner+Jahr TimeWarner Disney Viacom
- ----------- ---------- ------ ------
Der Club HBO Toon Disney M-TV
getmusic.com The WB Disney Infinity
BB TBS Superstation A&E TV LAND
GEO Explorer CNN ESPN Sundance Channel
bol.com WB Lifetime Nickelodeon
Capital Cinemax abc Showtime
Bantam Dell TCM Touchstone CBS
Gabler CNN.fn Pictures UPN
CLT UFA Castle Rock Go Network VH1
P.M. Time Miramax Paramount
www.andsold.de Cartoon Network Comedy Channel
Random House People online The Movie Channel
BMG Entertainment Sports Illustrated Nick at Nite
Springer Fortune
Goldmann Style
RCA
[Star] Magazin
Borse online
RTL
Bizz Capital
...And Will Dominate on the Internet
Terra Lycos
---------------------------------------------------------
Terra Lycos Terra Libre
Acceso a Internet gratis
Gamesville Quote.Com LycoShop
Comundo Sonique HotBot
Tripod Terra Premium Sympatico Lycos
Charla.con Lycos Zone Angelfire
Wired News Limaon
Invertia.com
As Audience Fragmentation
Accelerates...
[graphic of pie chart omitted]
1996 2003
- -------------------------------------- -----------------------------------
Kids (2-12) 3.8% Kids (2-12) 15.5%
Teens (13-18) 7.6% Teens (13-18) 11.4%
Older Adults (50+) 10.6% Older Adults (50+) 11.7%
Adults (19-50) 64.6% Adults (19-50) 47.1%
...A Network Gains Momentum
Growth in Traffic
Gamesville Quote.com
up 171% up 204%
--------------------------- -------------------------------
Dec 1999 Jul 2000 Dec 1999 Jul 2000
Invertia
up 358%
----------------------------
Dec 1999 Jul 2000
Source: Terra Lycos Management
Multibrand -- Appealing to a
Fragmenting Web Audience
[photographs of age groups omitted]
0 10 20 30 40 50 60+
---------------------------------------------------------------------------
Lycos Zone------> ----------------- Terra -------- Lycos-------------->
---------Angelfire----->
------------------------Gamesville------------------->
-------Almas Gemeas-----Tripod--->
----------Hot Bot--------->
-----------------Invertia.com------------->
----------------Quote.com------------>
Key Advantages Across All
Segments
Advertisers Company
--------------- -------------------
Highly targeted ---- A Global Network ---- Economies of scale
audiences | cultural unity and
| brand equity
|
Consumer
----------------------
Personalised world-
class brand experience
A Web Network Offers Significant
Efficiencies
o A global passport for registration
o Common selling organisation
o Precise advertising targeting
o Audience circulation and cross-promotion
Powerful Model for Growth and
Consolidation
o No user disruption
o Seamless positioning adjustment
o Multiple brands always lead to larger audiences
Exploiting Convergence Trends
[graphic of map of the world omitted]
Providing Access---------------->
o Acquiring users--------------->
o Fostering customer loyalty---->
terra lycos
The Access Model
[graphic of computer
monitor omitted]
4.7 million Subscribers
- -----------------------
User Acquisition ------------------> Free Access
--------------------------------
| |
| |
| |
Value Added Media
Services Revenue
| |
| |
Paid Services
Paid dial-up
Value-added Services---------------> Cable ---------> Advertising
Wireless Commerce
Satellite
XDSL
terra lycos
Exploiting Convergence Trends
Providing Aggregating
Access Audience
o Acquiring users o Best-of-breed services
attract traffic and
o Fostering customer loyalty facilitate circulation
[grapic (map) omitted]
terra [graphic omitted] lycos
Comprehensive Audience Aggregation Products
Search
terra logo LYCOS logo
HOTBOT logo logo FIREBALL
Community
logo tripod Angelfire logo
MAILCITY logo charla.con logo Almas Gemeas logo
Commerce
LYCOShop logo tiendasoft logo
Search Strategy
HOTBOT logo | o Widely recognised properties
|
LYCOS logo >>| o Drive traffic from search to content destinations
|
terra logos |
logo FIREBALL
Community Strategy
LOGO TRIPOD
| o Expand state-of-the-art
CHARLA.CON Angelfire >> | integrated community platform
|
logo Instanterra logo | o Textmail, voicemail, videomail
|
MAILCITY logo | o Community as a vertical driver
|
Almas Gemeas | o Customise community platforms to meet
| global needs
Exploiting Convergence Trends
Providing Access Aggregating Audience Offering Rich Content
o Acquiring users o Best-of-breed o Focus on verticals
services attract increases user
o Fostering customer traffic and loyalty and
loyalty facilitate circulation duration
terra [graphic omitted] logo
Targeted Vertical Content
Vertical Content
WIREDNEWS LOGO LYCOS COMPUTERS LOGO
QUOTE.COM LOGO INVERTIA.COM LOGO
SONIQUE LOGO LYCOS SPORTS LOGO
LYCOS TRAVEL LOGO GAMESVILLE LOGO
LYCOS ENTERTAINMENT LOGO
Vertical Content Strategy
o Established and emerging verticals
o Grow sticky content sites
Quote.com o Leverage Bertelsmann and Telefonica media content
Gamesville o Cross-pollinate Terra and Lycos content and content
partnerships
invertia.com o Drive network traffic into destinations
o Locally relevant content
Strategic Content Partnerships
Access Content
- -------------------------- -------------------------------
o 60 million + customers o Leading TV producer in Europe
Telefonica and in the Spanish and
o 17 million mobile Portuguese speaking world
subscribers
terra [graphic omitted] lycos
Bertelsmann logo
o 3rd largest media
company in the world
Source: Terra, Lycos and Telefonica Management Reports
Bertelsmann: Global Media Powerhouse 600 Companies in 54 Countries
bol.com logo [graphic omitted] BMG logo
Books Music
Random arvatco logo ARISTA logo online logo
House logo
o 25 m book club members o 200 record labels
around the world
o Celebrities drive massive page views
o 150 best sellers in the
NYT list in 98/99
Bertelsmann RTL logo UA logo
[graphic omitted] Springer logo
Magazine TV & o 120 m viewers in Europe
o The sale of 400 magazines Radio
o 22 TV channels
o 1,000 hours worth of
programming every year
o 22 TV channels
Source: Terra Lycos and Bertelsmann Management
-----------------------------------------------------------------
DIGITAL SHEET MUSIC
NET4MUSIC
WHERE MUSICIANS CONNECT Pop Download-Print-Play
[graphic omitted]
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
Search . Artists o Songs
LYCOS MUSIC logo FOR: Search! Search Help
- --------------------------------------------------------------------------------
Downloads News Concerts Charts Radio Videos
LOCATION: Lycos > Music > Featured Artist - Toni Braxton
Featured Artist - Toni Braxton
- --------------------------------------------------------------------------------
Toni Braxton Free Download
- --------------------------------------------------------------------------------
Five-time Grammy winner, Toni Braxton, has returned with her newest album, a
musical tour-de-force entitled The Heat.
This album showcases Toni's creative growth as a songwriter and producer as she
continues to explore themes of love, passion and romance. "Spanish Guitar," the
newest single from the album, is a gorgeous and sultry track accompanied by
sensual Latin guitar. Once again, Toni proves herself worthy of her pop diva
status. [GRAPHIC OMITTED]
"Spanish Guitar" is available as a free download on Lycos Music -- but only for
a limited time.
DOWNLOAD NOW (U.S. residents only)
File Info: Windows Media file, 4.45 MB, free, unlimited play for 14 days
System Requirements: PC, Netscape 4 or IE4 and above, Windows Media Player
Download: Windows Media Player
Visit click2music.com to enter to win a Toni Braxton "Beat the Heat" prize pack
including an autographed CD, Vinyl, and other items to beat the summer Heat.
- -------------------------------------------------------------------------------
Get the Music
- --------------------------------------------------------------------------------
WATCH (Real Player required)
The video of Toni's single "He Wasn't Man Enough"
BUY
The album The Heat from Barnes&Noble.com
[graphic omitted]
Get more information on Toni Braxton from Lycos Music.
Telefonica Content Alliance
[graphic omitted] TE LE FE logo SIENTA ONDA CERO RADIO logo
Antena 3 CONTINENTAL
2000 LOGO
TV Radio
o #1 private Spanish open TV o #1 in AM/FM in Argentina
o #1 TV channel in Argentina o #3 Spanish radio
PEARSON logo Telephonica
Media
Lolafilms logo [graphic omitted] HISPASAT logo [graphic omitted] VIA DGITAL
ENDENOL Entertainment [graphic omitted]
Audiovisual Sport [graphic omitted]
o Leading TV producer in Europe o 551,000 DTH subscribers
Media Pay TV
o Leading Spanish film producer Production and o Satellite coverage over
Satallite Spain and Latin America
Source: Terra Lycos and Telefonica Management
Rich Local Content Partnerships
[Map omitted] [logos omitted] [graphics omitted]
Exploiting Convergence Trends:
Providing Aggregating Offering Monetising
Access Audience Rich Traffic
Content
o Acquiring o Best-of-breed o Focus on o Sell
users services verticals advertising and
attract traffic increases user commerce to a
o Fostering and facilitate loyalty and segmented
customer circulation duration audience
loyalty
terra [graphic omitted] lycos
Distinct Media Model
o Geographic diversification Mass
Audience
--------------------
o Unique global platform Segmentation
------------
o Single point of contact Highly
Targeted
o Direct marketing --------
Powerful Media Platform
World-Class Advertising and Commerce Partners
[Logos and graphics omitted]
A&E hp invent COMPAQ BRITISH WIRWAYS BMW XEROX
MEXICANA Fidelity Investemnts(r) E-LOAN CVS/pharmacy Nobel la Caixa
Procter & Gamble BARNES & NOBLE IBM TIME WARNER patagonia TELEPIZZA
GAP Coca-Cola Disney unito THE WALL STREET JOURNAL
Lloyds TSB intel Kodak Forbes magazine Marrior.com
HBO GM AT&T Nintendo investShop.com
DELL BBVA UNIBANCO SONY
Bertelsmann
Ford
EddieBauer
Half of the Fortune 50
Agenda
1. Introduction
2. Vision
3. Strategy
4. Global Leadership
5. Branding, Audience and Content
6. Wireless Opportunity
7. Financials
8. Summary
Huge Wireless Market Opportunity
Growth in Wireless Handsets Wireless Internet Revenue
terra [graphic omitted] lycos
CAGR = 29% CAGR = 105%
$36
billion
1.1 is at the center of an exploding
billion market opportunity
303 $2
million billion
- ------------------------- ----------------------
1998 2003 1999 2003
Source: IDC, Goldman Sachs, excludes Intranet users, estimated to be 133 million in 2001
Mass Market Internet Opportunities
Wireless Revolution
PC Installed Base, CAGR (%)
Wireless 1999 - 2002
Subscribers
1000 Europe: 160m customers [graphic omitted]
WIRELESS 28.0%
900 United States: 103m customers
800
700 [graphic omitted]
PC 15.9%
600
500
400
1999 2000 2001 2002
Source: eTForecasts as of March 2000 and IDC as of March 2000.
Forrester December, 1999
Commanding Leadership
T. Guatemala Telefonica Moviles
#3 #1
100 75% [map omitted]
11,451
T. Del Salvador TeleSudeste
#2 #1
195 70%
2,156
[map omitted]
Telefonica Moviles CRT Cellular
#1 #1
37% 66%
810 1,167
Telefonica Moviles Tele Lest
#1 #1
45% 53%
1,225 589
Unifon
#2 2000 Ranking
105% YoY Growth
1,371 Mngd Customers ('000)
Source: Terra Lycos Management
Leading Wireless Carriers
Proportionate
Subscribers
(in millions) UMTS
------------- -------------------------------
Vodafone 39 Germany, Netherlands, Spain, UK
NTT DoCoMo 34 Japan
Telecom Italia 25 Spain
France Telecom 23 Germany, Netherlands, Spain, UK
Deutsche Tel 22 Germany, Netherlands
Telefonica 17 Germany, Spain
AT&T Wireless 12 -
BT 12 Germany, Netherlands, Spain, UK
Source: Brokers research, proportionate equity subscribers, company reports
Our Unique Wireless Platform
Mobile Operator Portals Wireless Portals
- --------------- ------- ----------------
o User knowledge o Content expertise o Development of killer
o Billing relationship o Services offerings applications
o Technology o E-commerce relationships o Niche applications
o Infrastructure o Management focus
The World's Leader
Telefonica moviles logl + terra [graphic omitted] lycos = in the Wireless
Internet Market
o 17 million users o 91 million unique o 1.3 million users
world-wide users in Finland,
Sweden,
Germany and UK
iobox logo
Terra Mobile Portal
Personal information
M-Commerce Publicity Management
- --------------- --------- --------------------
o Event ticket o Sponsorship o Agenda
o Personalised o Listing fees o Calendar
promotions o CBC
o Travel
o Auctions,... A new
universe of
services
Mobile Portal oriented to
- -----------------------------------------------------------------> the
consumer
Information market
Services Entertainment Communication
- --------------- ------------- --------------------
o News o Personalised o E-mail
o The weather melodies o Instant messaging
o The traffic,... o Icons,... o Chat
Information Services
Users can access a wide range of contents,
classified by channels or sections in order to offer
the easiest interface to find the more interesting and
suitable information
Entertainment
A great set of games and entertainment
ideas specially designed
for the mobile device
M-Commerce
The mobile device allows secure payments and
transactions in order to purchase products,
contents or services
TV Promotional Campaign
Terra Lycos Mobile Value Proposition
Infotainment M-Advertising
- --------------------------------------------------------
Entertainment News Guides
Personalised Services Information Services
- --------------------------------------------------------
Search Chat Communications M-Commerce
- --------------------------------------------------------
Infotainment
Agenda
1 Introduction
2 Vision
3 Strategy
4 Global Leadership
5 Branding, Audience and Content
6 Wireless Opportunity
7 Financials
8 Summary
Combination of Two Powerful Business Models
LYCOS LOGO terra logo
Web Access Web
Lycos Network Terra Network
Advertising COmmerce Advertising
Lycos Historical Results
Track Record of Fast Growth and Profitability
Quarterly Revenues ($M) Quarterly Net income ($M)
$46 $56 $69 $79 $88 $3 $8 $13
13%
Operating
91% 333% Margin
- --------------------------------------------- ---------------------------------------------
Jul Oct Jan Apr Jul
1999 1999 2000 2000 2000 $(3) $(2)
Jul Oct Jan Apr Jul
1999 1999 2000 2000 2000
Source: Terra Lycos Management Reports
Terra Historical Results
Accelerated Growth Profile
Quarterly Revenues ($M)
262%
- --------------------------------------------------------------------------------
$13 $21 $28 $37 $47
June 1999 Sep 1999 Dec 1999 Mar 2000 Jun 2000
Source: Terra Lycos Management Reports
Next Generation Business Model
Telefonica Broadband Fixed Lines Wireless Web Bertelsmann
Content ------------------------------------------------- Content
terra [graphic omitted] lycos
Media Revenue Access Revenue
o Advertising o Subscription fees
o Commerce o Value added services
o Direct marketing
Key Business Model Drivers
Media Access
- --------------------- --------------------
o Page views o Subscribers
o Targeted inventory o Pricing
o Sell-through rate o Retention rate
o CPMs
o Transactions
Industry Leading Revenue Growth
o EBITDA positive Q4 2001
o Long-term revenue mix:
o 85% Media
o 15% Access
80% Growth
--------------------------------
$97m $280m $500m $900m
CY 1998 CY 1999 Projected 2000 Projected 2001
o Pro-forma calendar year revenues for Terra and Lycos as if they were
combined for all periods presented
Source: Historical results based on Terra Lycos Management Reports. Projected
2000 and 2001 based on Terra Lycos Management Projections
Accelerated Revenue Growth
o Bertelsmann revenue commitment
o Large and experienced sales force
Advertising/
Commerce o Advertising and commerce cross-selling
o Unique global platform
Leverage o Integration of Bertelsmann and Telefonica content
Content
Portfolio o Integrate Terra and Lycos content across network
Wireless o Joint Venture with Telefonica Moviles
Potential Revenue Upside
International Joint Venture Revenues
o Revenues from international Joint Ventures $1,100m
o Terra Lycos Pro-forma Revenues --------
$586m
------ $900m
$300m
----- $500m
$280m
$101m
-----
$97m
CY 1998 CY 1999 Projected Projected
2000 2001
o Pro-forma calendar year revenues for Terra and Lycos as if they were
combined for all periods presented
Source: Historical results based on Terra Lycos Management Reports. Projected
2000 and 2001 based on Terra Lycos Management Projections
Accelerated Path to Profitability
o Process efficiency
o Leverage scale to improve cost structure
Operating o Rationalisation of R&D activities
Leverage
o Drive traffic among branded sites
o Single G&A function
o Terra avoids investments in Europe, Asia and
Avoided North America
Investments
o Lycos avoids investments in Latin America
Successful Acquisition Track Record
Terra Growth Since Lycos Growth Since
Acquisitions Acquisition Acquisitions Acquisition
- --------------------------------------------------------------------------------
Ole logo 338% tripod logo 312%
zaz logo 149% Angelfire logo 153%
infosel logo 478% Gamesville logo 172%
GauchoNet logo 300% Quote.com logo 204%
CTC logo 400% Sonique logo 107%
Page view growth since acquisition
Future Acquisition Strategy
o $3 billion in cash and strong equity currency
o Lead consolidation across geographies
o Acquisition targets
o Vertical content
o Enabling technologies
o Audience aggregators
o Wireless
o Fundamental criteria for acquisitions
o Time to market
o Market share
o Management talent
o Cultural fit
o Financial momentum
Long-Term Operating Model
Media Access Total
----- ------ -----
Revenue 100% 100% 100%
Gross margin 85-90 50-55 80-85
Research & development 10-12 2-5 8-10
Sales & marketing 30-35 30-35 30-35
General & administrative 5-8 3-6 5-8
- ----------------------------------------------------------------------
Operating margin 35-40% 10-15% 30-35%
- ----------------------------------------------------------------------
Fact Sheet
o Accounting Spanish and US GAAP
o Fiscal year December 31st
o Revenue lines Media and Access
o Listing Madrid and NASDAQ
o Trading symbol Madrid - TRR
Nasdaq - TRLY
o Shares outstanding 560 - 600 million
o Proforma ownership* Lycos 47%
Terra 16%
Telefonica 37%
* Assumes midpoint of the range
Milestones
Globalisation
- -------------
o Strengthened position in key geographic markets
o Consolidate markets through acquisitions
Convergence
- -----------
o Worldwide wireless rollout
o Bertelsmann content integration
Profitability
- -------------
o $900 million in 2001 revenue
o EBITDA positive in Q4 2001
Note: Profitability and revenue projections based on Terra Lycos
Management reports
Agenda
1. Introduction
2. Vision
3. Strategy
4. Global Leadership
5. Branding, Audience and Content
6. Wireless Opportunity
7. Financials
8. Summary
Investment Highlights...
o # 1 Global Footprint
o # 1 Revenue Growth
o # 1 Wireless Platform
o # 4 World-wide Access Provider
o Leading Cash Position
o Market's Leading Convergence Vehicle
...All With A Clear Path to Profitability
Note: Management estimates relative to Terra Lycos peer group