Madrid-headquartered ISP Terra Lycos is hotly tipped to make a US purchase in a bid to catch up with online giant America Online. However, there is some doubt over the identity of the object of its affections.

One rumoured target is EarthLink, America’s second largest ISP with 4.8 million subscribers, with which Terra Lycos is thought to be in buy-out talks. However, speculation grew yesterday that the Spanish company may try to purchase San Francisco-based portal and content supplier CNet Networks.

With a war-chest of $2.2 billion, Terra Lycos could only afford one of the two potential acquisitions. If it wants to compete with AOL, say analysts, EarthLink would be vital.

The news came as Terra Lycos, despite its predatory mood, lowered revenue forecasts for 2001 from the $900m expected by analysts to $623m–$650m. The company has also postponed the date it expects to hit profitability by six months to Q2 2002.

News sources: BBC Online Business News (UK); Advertising Age - Interactive Daily