RealTime IT News In the Driver's Seat?

Nothing seems to work for e-tailing stocks. Yesterday, (AWEB) announced that Lycos agreed to buy 10 percent of the company. In the old days (i.e., late last year), such news would have catapulted the stock. Instead, was actually down 3/32 to 3-7/8.

But is a buy? Is the market missing the boat? Well, there is no doubt that the online auto market is huge. According to J.D. Power and Associates, more than 55 percent of new car buyers currently use the Net to shop for cars. This is expected to soar to 80 percent by 2003.

The Lycos deal is critical. It covers four years, in which both companies will jointly manage a new online auto channel (Lycos has about 33 million users). Interestingly enough, the agreement calls for both firms to develop wireless auto services.

Lycos will purchase 10 percent of, which will provide much needed capital to the auto e-tailer (the estimated investment is $10 million). Of course, there is a price tag; although, it is vague: "yearly multi-million-dollar payments" to Lycos.

To me, it sounds like was negotiating from the vantage point of weakness. The company needs cash. At the end of 1999, had $32 million of cash on its balance.

As for Lycos, they have a low-risk position. They are guaranteed multi-million-dollar payments for the next four years. What's more, a $10 million investment in is not very material for Lycos.

Finally, must face tremendous competition, such as from, (which is a backer) and even

The big question is: If a deal with Lycos cannot lift the share price, what can?

Subscribe to's HotWatch, a monthly e-mail newsletter featuring Internet Stock Report's top 10 noteworthy Internet stocks for the month. Each month you will receive in-depth analysis on the top 10 Internet stocks to watch with the information you need to assess the fast-paced nature of Internet stocks. Staying on top of market changes in the Internet Stock market is what counts. You receive 12 timely issues sent to you by e-mail. Don't wait, our next issue will be out before you know it with a whole new perspective on the market. Sign up today at: e-newsletters