Terra Networks

Infobox_Company
company_name = Terra Networks (aka WUM), S.A.
company_
company_type = Subsidiary
company_slogan =
foundation = 1999
location = flagicon|Spain Spain
industry = Internet
products = Web Portal
Internet Service Provider
Search Engine
revenue = profit € ? billion (2006)
net_income = loss € ? billion (2006)
operating_income = profit € ? billion (2006)
num_employees = ??? (2006)
key_people =
parent = Telefonica Group
alliance =
homepage = [http://www.terra.com]
foot_notes =

Terra Networks (aka WUM), S. A., usually referred to as "Terra", is an Internet multinational company with headquarters in Spain. Part of Telefónica Group (the former Spain's public telephone monopoly and now one of the most important telecommunications companies in the world), Terra operates both as a web portal and/or an internet access provider in the U.S., Spain, and 16 Latin American countries. Terra was publicly traded on NASDAQ under the symbol TRLY and on the Spanish stock market under the symbol TRR.

Terra was founded in 1999 by Juan Villalonga, Telefonica's president between 1996 and 2000, and quickly turned into a major internet player through the aggressive acquisition of several local startups in main Latin American markets: Olé (Spain), Zaz (Brazil), Infosel (Mexico), Gauchonet y Donde (Argentina).

Terra has also created several vertical portals, like [http://www.invertia.com Invertia] , a successful finance portal, and [http://www.educaterra.com Educaterra] (e-learning). It also has had or has stakes in other internet ventures: [http://www.uno-e.com Uno-e] (online banking), [http://www.rumbo.com Rumbo] (travel, in partnership with Amadeus), [http://www.atrea.com Atrea] (real estate, in partnership with Spanish bank BBVA), [http://www.azeler.com Azeler] (car selling, also with BBVA), and [http://www.maptel.com Maptel] (online maps).

In November 1999, still during the period known as the "Internet bubble", Terra had a high-profile IPO both in the U.S. and Spain, and its shares skyrocketed from an initial price of 11.81 euros up to 157.65 euros in just 3 months. After that, the price fell sharply until it reached 2.75 euros in October 2004. This process sparked a lot of public controversy in Spain, where thousands of small investors acquired shares of Terra during the boom. Despite this problematic image, Terra managed to hold leading positions both as a web portal and as an ISP provider in several countries, and specially in Spain.

In April 2000, Terra surprised the internet market with the acquisition of Lycos, the U.S. portal, in a stock swap valued at US$ 12.5 billion. By that time, Lycos was the third most visited portal in the U.S., according to Nielsen//NetRatings, and had a strong presence in key European and Asian markets. Specialists expected that the combination of Lycos with Terra's dominance in Latin America would create a powerful company, able even to challenge giants like AOL, Yahoo! or MSN. Lycos CEO Bob Davis was moved to the position of CEO of the combined company, from where he stepped down in January 2001, being replaced by then Chairman Joaquim Agut.

Part of the deal was also German media giant Bertelsmann, owner of a stake in Lycos Europe. In exchange for keeping the control over Lycos Europe, Bertelsmann agreed to spend US$ 1 billion worth in advertising at Terra Lycos through a five-year period. That spending was crucial for Terra to survive the times of the internet crash, when several Latin American-based internet companies like Quepasa, Starmedia or El Sitio lost cash up to the point of filing for bankruptcy or being taken over by bigger companies.

In 2003 Bertelsmann executed an option to get itself out of the agreement, transferring to Terra's parent company Telefonica the obligation to keep the ad spending. Soon after that, Telefonica decided to get more control over Terra and launched an offer for shares of Terra still floating on the stock market. Although it granted Telefonica control over more than 70% of Terra's stock, the move was not successful enough to let Telefonica take Terra out of the public, as it was allegedly its objective.

During 2003 and 2004 Terra expanded aggressively into the paid content business, mainly in Spain, Brazil, and Chile, launching ventures with Disney and Spanish football clubs Real Madrid and FC Barcelona. It also started several entertainment services, including an online multiplayer gaming platform (Terra Games) and a digital music service (Terra Música Premium) similar to Apple Computer's iTunes.

In October 2004, following Telefonica's decision to re-focus their businesses, Terra sold Lycos to South Korean Internet portal company Daum Communications for US$ 105 million. Kim Faura was Terra's last chairman. Joaquim Agut was the previous one, and now he is chairman of Endemol.

Telefonica take-over

In February 2005, Telefonica announced its intention of taking full control of Terra by giving Telefonica' shares in exchange for Terra's remaining shares in the stock market. After this plan was approved by both Telefonica and Terra shareholders meetings, Terra's shares were finally excluded from the market on July 15, 2005.

From that moment, Terra Networks S.A. was merged into Telefonica, S.A. and, therefore, disappeared from a legal point of view. A small portion of the former corporate headquarters became "Terra Networks Asociadas, S.L.U." (a new company) and local Terra operations (and assets) were transferred to local fixed-line Telefónica companies.

The domain "terra.com.br" attracted almost 2 million visitors annually by 2008 according to a Compete.com study. [ [http://siteanalytics.compete.com/terra.com.br?metric=uv Terra attracts almost 2m visitors yearly] ]

References