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To: Todd Pagel who wrote (10966)	6/28/1999 10:23:00 AM
From: Jenne	Read Replies (1) \| Respond to of 19700

CMGI looms over AltaVista face lift By Jim Kerstetter and John Dodge, PC Week June 27, 1999 9:04 PM PT AltaVista Co. CEO Rod Schrock has a vision for his little slice of Compaq Computer Corp. But it's a vision that could change radically this week. Compaq (NYSE:CPQ) and Internet venture capital company CMGI Inc. (Nasdaq:CMGI) were on the verge of sealing a deal late last week that would give CMGI a controlling interest in the Internet search site, which Compaq acquired a little more than a year ago with its purchase of Digital Equipment Corp. Add your comments to the bottom of this page. CMGI issued a short statement last week saying only that it had entered into preliminary discussions with Compaq. The company said it would have no further statements until a definitive agreement was reached. It's unclear what impact the deal would have on AltaVista's planned initial public offering. No clear Net strategy The deal could hit today just as Schrock and other AltaVista executives in Palo Alto, Calif., announce a complete redesign of the site, which has struggled over the last year to keep up with the growth of fast-changing rivals such as Yahoo Inc. (Nasdaq:YHOO) and Lycos Inc. (Nasdaq:LCOS). MORE FROM ZDNET: AltaVista opportunity slipping away? Hasta La Vista, AltaVista! CMGI sets its sights on AltaVista "It's never really been pushed forward as a commercial property like the other search engines have," said Scott Smith, president of Tera Group LLC, in McLean, Va. "The question is, What do they want to do?" That question has dogged Compaq since it picked up AltaVista. The PC maker, beset by internal problems, has been unable to come up with a clear Internet strategy. But Schrock wouldn't say if executive turmoil, including April's ouster of Compaq CEO Eckhard Pfeiffer, has contributed to malaise at the AltaVista division. "You're taking me down a path we probably should not go down," he said in an interview last week. Schrock would much rather discuss the improved AltaVista Network, which will include a "freshness guarantee" of search results, improved multimedia search capabilities and at least 25 new search features by the end of the year. Part of the business mix AltaVista also is bringing together the online shopping capabilities picked up in Compaq's acquisition of Shopping.com, as well as launching local portal services called Homebase, built with technology and content from the April acquisition of Zip2 Corp. The integration of Shopping.com, on which Compaq spent an estimated $220 million in January, will introduce "Ultimate Brand" auctioning capabilities on its seven online superstores, with auctioning on name-brand products starting at $1. 'While it may be true that we have been unsure what to do with [AltaVista], we have a clear vision now.' -- Altavista Co. CEO Rod Schrock Also debuting this week is AltaVista MicroPortal, a downloadable microbrowser that users can keep open as a separate desktop window. It will provide updated news, weather, sports and stock information and will enable users to conduct keyword and stock quote searches without interrupting other online work. It will be available next month. "While it may be true that we have been unsure what to do with [AltaVista], we have a clear vision now," said Schrock, a 12-year veteran of Houston-based Compaq. But could that vision become clouded by CMGI? The investor's interest in AltaVista shocked some observers, since it has an 18 percent ownership stake in Lycos. Indeed, the Lycos relationship has been strained since CMGI's successful efforts last month to quash Lycos' planned merger with USA Networks Inc. Now AltaVista is part of the mix. Schrock believes a deal with CMGI, which would include all of AltaVista's recent acquisitions, is imminent. From his standpoint, a CMGI relationship would only improve his plans for AltaVista. "This is a great opportunity to pull an entire Internet practice together," he said. The AltaVista site is only one part of a larger business relationship that Compaq and CMGI were negotiating last week, Schrock said. He sketched out a vague picture of an Internet services company that provides vertical market portal services similar to America Online Inc.'s MyNetcenter. That services company could also provide other Web-enabling implementation and consulting to businesses. Just who would control that company is unclear. Analysts say they can understand why CMGI would still be interested in AltaVista, despite its recent problems. "I think it's just been a neglected property," said Tera Group's Smith. "But provided the technology underneath it is still solid, it would be a good fixer-upper for another company."