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.