Compaq to spin off AltaVista unit
Computer giant plans IPO; seeks Web leadership
By Steve Gelsi, CBS MarketWatch
Last Update: 9:52 AM ET Jan 26, 1999 NewsWatch
NEW YORK (CBS.MW) -- Compaq said Tuesday it's spinning off AltaVista with the aim of making the search engine, "the leading destination site for information and e-commerce on the Internet."
Compaq (CPQ) said it will establish Palo Alto, Calif.-based AltaVista as a publicly traded company. Piper Jaffray analyst Ashok Kumar estimated that the IPO could value AltaVista at $2 billion, The Wall Street Journal reported.
Shares of Houston-based Compaq rose 2 5/8, or 5.6 percent, to 49 5/16 in early trading.
Compaq is teaming up with Microsoft's (MSFT) Microsoft Network
for an AltaVista-branded version of Microsoft's Hotmail
service as well as future Microsoft instant messaging technology.
The companies agreed to work together other Web-based communications and community building services.
Microsoft agreed that AltaVista will be the primary search engine powering the Microsoft Network.
Rationale for deal
"By establishing AltaVista as a separate company, it can better focus on providing the best user experience on the Internet, from search, to commerce, to communication and community," Compaq CEO Eckhard Pfeiffer said in a statement. "We see this as a significant opportunity for Compaq to expand its share of the rapidly growing Internet market for content and services and also enables us to unlock the tremendous value of AltaVista for our shareholders."
Compaq may also be attempting to cash in on Wall Street's love affair with Internet stocks.
Compaq bought AltaVista after purchasing Digital Equipment Corp. last year.
"Today's announcement further demonstrates Compaq's strategic intent to solidify its position as a major Internet player," the company said.
Pfeiffer named Rod Schrock, senior vice president of consumer products, as President and CEO of AltaVista.
The company credits Schrock with establishing Compaq as number one in the home PC market, the launch of Compaq's Presario Internet PC, and other milestones.
AltaVista speed
Schrock said AltaVista users will get results with fewer click-throughs and page-views than other Internet sites, more rapid delivery of news and stock quotes as well as faster e-commerce transactions.
"We will measure ourselves on customer loyalty and revenue growth,"
Schrock said. "Users may actually spend less time per visit on AltaVista, but because they will get better results faster, they will come back more often."
AltaVista is the ninth largest individual domain on the Internet, according to Relevant Knowledge.
AltaVista's audience increased 45 percent in the fourth quarter over the previous quarter and revenue increased 64 percent during the same time frame, the company said.
Regards
Neil |
