Compaq to Announce Spin Off of AltaVista, Person
Familiar Says
Bloomberg News
January 25, 1999, 4:39 p.m. PT
Compaq to Announce Spin Off of AltaVista, Person Familiar Says
Houston, Jan. 25 (Bloomberg) -- Compaq Computer Corp., the
world's second-largest computer maker, is expected to announce
plans to sell or spin off part of its AltaVista web site in a
public offering, a person familiar with the company's plans said.
Compaq, which acquired AltaVista in its $9 billion purchase
of Digital Equipment Corp. in June, is expected to make the
announcement at a press conference with Chief Executive Eckhard
Pfeiffer in New York tomorrow. Details of the transaction weren't
available. Compaq declined to comment.
Analysts had been expecting Compaq to spin off AltaVista,
the No. 11 web site. It uses technology allowing users to search
for subjects using simple questions. Compaq has been souping up
the site with its acquisition of Shopping.com and struck a deal
with Microsoft Corp. to feature AltaVista on its MSN site.
''They're investing heavily in it -- a spin off would be
very likely,'' said Paul Deninger, chairman and chief executive
of Broadview International, a small investment bank in Ft. Lee,
New Jersey.
Houston-based Compaq is likely looking to capitalize on the
rich valuations given to Internet-related companies selling
shares in recent weeks. MarketWatch.com Inc., which offers real-
time news and financial programming on the Internet, saw its
shares rise more than fivefold in the first day of trading. UBid
Inc., an online auctioneer of computer goods, more than tripled
in its first day of trading, and commands a market value of $601
million.
Recent mergers also have heated up competition for Web
companies. Excite Inc. agreed to be acquired by At Home Corp.
last week for $7.2 billion and America Online Inc. plans to buy
Netscape Communications Corp. for $4.2 billion.
''There's no doubt they'd get a better valuation for
AltaVista if they spun it off,'' said Lisa Rapuano, portfolio
manager at Legg Mason Inc., which owns 5.8 million shares of
Compaq. ''It doesn't really fit with their core hardware business
-- it's an underutilized asset.''
Shares of Compaq rose 1/2 to 46 11/16.
--Molly Williams in San Francisco (415) 912-2993/pkc |
