Compaq to Sell Small Stake in Alta Vista Search Site
(FYI: from NY Times)
By SAUL HANSELL
Compaq Computer Corp. said Tuesday that it would sell a minority stake in its Alta Vista service to the public as part of an effort to build a leading player in advertising and shopping on the Internet.
The announcement comes just days after extended negotiations between Compaq and Time Warner Inc. collapsed, according to executives familiar with the talks. Time Warner was going to exchange its extensive
Internet operations, including sites linked to its magazines, CNN and Warner Bros. entertainment properties, in return for a big stake in Alta Vista, the people said.
The talks ended because, among other reasons, Time Warner was not willing to cede Compaq any control over its news and entertainment content, the executives said.
Eckhard Pfeiffer, Compaq's chief executive, said in an interview Tuesday that Compaq now wants to control its own Internet strategy.
"As we dug into the capabilities of Alta Vista, we concluded that rather than give away the tremendous opportunity we had, we would make the leap into the Internet space in a much broader way than we have until now," he said. "We intend to be among the top three leaders in the industry," he said.
Until now, Alta Vista had mainly been known for its vast index that allowed people to search millions of pages on the Internet to find a specific word or phrase. It was started mainly to be a demonstration of Internet technology by Digital Equipment Corp., which Compaq bought last year.
As the stock-market valuations of Internet companies have surged in recent months, Compaq has realized that Alta Vista may well have been one of Digital's unappreciated crown jewels.
Compaq will establish Alta Vista as an independent company based in Palo Alto, Calif. It will be run by Rod Schrock, the executive who introduced Compaq's Presario line of consumer personal computers, which are now the sales leaders in their class.
The company hopes the stock offering will be in the second half of this year or early next year, Pfeiffer said.
Analysts said that in today's market, an offering could value Alta Vista at between $1 billion and $2 billion.
Compaq said it wanted Alta Vista to expand from merely a search service to resemble what have come to be known as portal sites because they are doorways to everything from news to chat rooms to shopping.
To flesh out Alta Vista's offering, Compaq had been upgrading the site with more features and had also engaged in a flurry of deal making.
Two weeks ago, Compaq agreed to buy Shopping.Com, an Internet retailer that had been plagued by accounting irregularities and management changes. While its sales have been small, Shopping.com has links to suppliers to offer a very wide range of products from doghouses to disk drives.
On Tuesday, Compaq said it would offer electronic mail on the site using software based on Microsoft's Hotmail service. It will also use Microsoft's chat software when it is released this spring. In exchange, Compaq will allow Microsoft to use Alta Vista technology to provide Internet searches on its MSN Web site. (Now Microsoft has been paying another search company, Inktomi, to operate its search service.)
And Compaq is looking to replace the abandoned Time Warner deal with another arrangement with a media company, which could provide information content, perhaps in return for a partial stake in Alta Vista, Pfeiffer said.
Alta Vista faces stiff competition in the portal business. The leaders are Yahoo and America Online, which has recently bolstered its presence on the World Wide Web with an agreement to buy Netscape Communications Corp. Other aspirants include Microsoft's MSN network, Walt Disney Co.'s Go Network, and Excite, which recently agreed to be bought by At Home.
And analysts said they do not yet see how Alta Vista will rise above the pack.
"The hard part is to give people something better than they already have," said Paul Noglows, an analyst with Hambrecht & Quist. |
