IBM, Terra Lycos sign pact

NEW YORK: IBM Corp. and Spain's Terra Lycos said on Thursday they struck a
two-year agreement that makes the world's largest computer maker the main
provider of servers, enterprise software and services for the Internet media
company.

In a separate deal, the companies said in a statement that IBM will advertise
on Terra Lycos' network of sites. Terra Lycos was created by the merger of
Spanish telecom giant Telefonica SA's Internet arm and US-based Internet company
Lycos last year.

The deal comes at a time when Internet media companies are aggressively
trying to sign-up blue-chip clients in the wake of a sharp decline in
advertising spending. Financial terms of both deals were not disclosed but the
company said the hardware and services component of the deal will amount to
"tens of millions of dollars" over the term of the pact.

As part of the technology and marketing deal, IBM will provide the products
and services for Terra Lycos' worldwide e-business infrastructure, helping the
company service its Web surfers and handle more customers while cutting
operating costs.

The IBM systems will tie together Terra Lycos' Web-serving, enterprise
resource planning, and customer relationship management and systems. The
companies have also agreed to explore marketing opportunities in the future, as
well as collaborate on research.

"Today's announcement creates a powerful relationship between IBM and
Terra Lycos," said Joaquim Agut, executive chairman of Terra Lycos, in a
statement. "The pairing of the two global leaders provides a platform for
technology exchanges and collaboration on strategic projects."

It is similar to deal struck by Terra Lycos rival AOL Time Warner Inc., who
has become known for its myriad of marketing deals this year struck with
different partners, including some of its technology suppliers.

The deal comes ahead of Terra Lycos' quarterly earnings report next week. The
company, like many of its peers, has been hit by the ad slump created by the
economic slowdown and dot-com bust, and investors will gauge the company on its
cost-cutting efforts and progress toward profitability.

In May the company cut 15 per cent of its workforce and executives said there
was increased focus on fee-based services.

(C) Reuters Limited 2001.