WSJ's take on the Shopping.com purchase (part 1)
by: soltrader (48/F/Toronto)
48920 of 48933
January 12, 1999
Compaq Agrees to Pay $220 Million
To Buy Online Retailer Shopping.com
By GARY MCWILLIAMS
Staff Reporter of THE WALL STREET JOURNAL
Compaq Computer Corp. agreed to pay $220 million, or $19 a share, to acquire
online retailer Shopping.com, in a bid to jump-start its electronic-commerce
efforts.
The world's largest personal-computer maker said it will combine the online
shopping service of the struggling Corona del Mar, Calif., company with its
Alta Vista search site (www.altavista.com) to create a Web "portal" site to
access information, shopping and services such as electronic mail. "Our intent
is to become the leading guide to the Internet," said Rod W. Schrock, Compaq
senior vice president, consumer products.
Observers said the purchase signals a new push
at Compaq to catch up with rivals, such as
International Business Machines Corp., Sun
Microsystems Inc. and Dell Computer Corp.,
that have aggressively embraced electronic
commerce. Compaq, Houston, is developing
software that will enable customers to seek bids
on other companies' software and services from
a Compaq Web site. Until recently, Compaq has
been largely sidelined in selling e-commerce
systems to customers because it lacks a
software-development arm.
Shopping.com, though an unprofitable firm with a history of management
turmoil, brings Compaq important software for initiating a purchase,
conducting credit checks and maintaining electronic links to suppliers. Compaq
also intends to funnel visitors to its Alta Vista search site into Shopping.com's
collection of 63 online "warehouses" that sell everything from computers to
jewelry.
Mr. Schrock said the acquisition, when combined with Alta Vista and other as
yet undisclosed efforts, could become competition for Internet portal sites
such as Yahoo!, America Online and Excite. Alta Vista, a Web search service
acquired as part of last year's purchase of Digital Equipment Corp., receives 11
million visitors a month, according to Media Metrix Inc. It is the 10th most
frequently visited Web site, ahead of even Amazon.com.
Analysts, who have insisted Compaq needed to invest more in Alta Vista or risk
falling behind fast-moving rivals, played down the purchase as too little, too
late. "Alta Vista is playing catch up," says Mark Mooradian, an analyst at
Jupiter Communications LLC, New York. Yahoo and other portals are much
further along in creating personalized-shopping and information-retrieval
features that have yet to be offered on Alta Vista, says Patrick J. Meehan,
research director at Gartner Group Inc., Stamford, Conn. Compaq, he said,
"needs to look to an alliance with a media company that understands this
space."
Compaq has said in the past that it is in discussions with potential partners to
enhance Alta Vista. Industry observers have linked Compaq to talks with Time
Warner Inc. on providing content and distribution. A Time Warner spokesman
declined to comment on any talks, as did Mr. Schrock. However, he
acknowledged: "We'll be accelerating our activities for e-commerce." |
