Net Notebook: The Little Guy Speaks Out on Lycos Deal

Plus, Preview Travel's CEO resigns and eToys plans an IPO.
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SAN FRANCISCO -- The pending acquisition of Lycos (LCOS) by USA Networks (USAI) - Get Report has provoked at least one irate shareholder to make his voice heard on the Internet.

Richard Ralph has launched a Web site titled "Lycos Take Under," with the catchy domain name

Dillersdealstinks. The site posts updates on the deal and provides bulletin boards and company contact information so shareholders know whom to call with their complaints.

"I believe Lycos is a good company, can be extremely profitable and has the potential to rival

AOL

(AOL)

(which I am also long),

Yahoo!

(YHOO)

,

Amazon.com

(AMZN) - Get Report

and others for Web portal and e-commerce leadership," the site says.

"I don't think that Barry Diller and USA Networks have the kind of synergy that Lycos and other portal companies need to go forward," says Ralph, who is long both Lycos and

CMGI

(CMGI)

.

Wall Street traders have spoken and they don't like the deal either, he says, which is why the stock fell 26% the day the deal was announced.

"I'm a geek first and an investor second," says Ralph, who has owned 118 shares of LCOS and 60 shares of CMGI for "several months." He says he bought in because he was excited about Lycos' acquisition growth strategy, but when he first read about the USA deal, "My first thought was, 'Aww, man, this sucks. This isn't going to take e-commerce forward.'"

eToys Files for IPO

Yet another Internet offering was initiated Wednesday, this one from the online toy seller

eToys

. The Web-based retailer, which focuses on children's products such as toys, video games, software, videos and music, filed to raise up to $115 million in an IPO. eToys intends to trade on the Nasdaq under the symbol ETYS.

Since launching its Web site in October 1997, the company has sold children's products to more than 320,000 customers. eToys reported sales of $22.9 million and a net loss of $9.78 million for the quarter ended Dec. 31. For the same quarter a year earlier, sales were $500,000 and net loss was $746,000.

Goldman Sachs

,

BancBoston Robertson Stephens

,

Donaldson Lufkin & Jenrette

and

Merrill Lynch

are the underwriters.

PTVL's CEO Exits

Preview Travel

(PTVL)

said Tuesday its president and chief executive, Ken Orton, is resigning. Founder and Chairman Jim Hornthal, who served as CEO of the company from March 1985 to June 1997, will serve as interim CEO of the company.

The company's stock fell 10.5% Wednesday following the news. Orton "has expressed a personal desire to focus his time and energy on working with entrepreneurs and development-stage companies," said Hornthal in a prepared statement. Orton will work with Preview Travel as a consultant on an interim basis.

While the resignation was unexpected, Orton's departure does not appear to be related to poor first-quarter performance, wrote Rob Martin, a

Friedman, Billings Ramsey

analyst. "We are encouraged by recent signs of increased bookings based on successful marketing efforts," Martin said in the report. The analyst, who rates the stock buy and whose firm has no underwriting relationship with the company, expects $75 million in bookings and $5.3 million in revenue during Preview Travel's first quarter.

1998 Venture Capital Investment Tops Record

Venture capital investments in the U.S. reached an all-time record of $14.3 billion in 1998, and Internet venture capital showed the largest growth, according to a

PricewaterhouseCoopers

survey released Tuesday. The new record surpassed 1997's record high by $2.8 billion, or 24%.

Technology companies accounted for $10.8 billion, or 76% of all 1998 venture investments. The number of companies receiving venture investments climbed 7% to 2,856, and the average grant size increased to $5 million, up 16% from 1997.

Internet investments soared 66%, the largest single increase in any category, to $3.5 billion. The software and information sector increased 57% to $4.5 billion, and the communications category rose 32% to $3.9 billion.

"Technology investments have nearly doubled in two years while Internet-related investments have tripled," said James Atwell, managing partner of PricewaterhouseCoopers' Global Technology Industry Group. "We expect these sectors to continue to dominate venture capital investing throughout 1999."

Silicon Valley received $4.5 billion in venture capital, passing the $4 billion mark for the first time. New England broke the $2 billion mark and the Southeast ranked third with $1.1 billion in venture capital investments. Also in the top five regions were the Midwest and Texas.

Results from the survey reflect the activity of a total of 632 venture capital firms.

Concerned about the future of Net stocks? TSC is holding a special summit on Friday to discuss the Internet sector. Join columnists James J. Cramer and Herb Greenberg, Andy Kessler of Velocity Capital, Nicholas Moore of Jurika & Voyles, CIBC Oppenheimer's Henry Blodget, Internet Fund manager Ryan Jacob and Brian Salerno of Munder Capital. You'll be able to listen to a live broadcast of the event and later read the transcripts -- but first, help us shape the discussion. Visit

this page for the details.