RealTime IT News

Compaq Plans Spinoff, IPO for AltaVista

Compaq Computer Corp. Tuesday announced plans to spin-off its AltaVista search engine and take it public.

Compaq inherited the AltaVista search engine when it acquired Digital Equipment Corp. last year. Almost immediately after the acquisition, speculation began as to what Compaq would do with the search engine.

Separately, Microsoft Corp. reached an agreement with Compaq to use AltaVista search technology across the MSN network of Web sites. In exchange, Compaq will license Microsoft's Hotmail e-mail service for use on AltaVista. AltaVista replaces Inktomi Corp. as the MSN network's search provider.

Compaq executives said Tuesday's announcements signal the company's dedication to AltaVista and its determination to make it a major player.

"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," said Eckhard Pfeiffer, Compaq's president and chief executive officer.

"We see this as a significant opportunity for Compaq to expand its share of the rapidly growing Internet market for content and services. It also enables us to unlock the tremendous value of AltaVista for our shareholders," he said.

Compaq did not say when it plans to file to take AltaVista public.

Compaq also named Rod Shrock, senior vice president of its consumer product group, as president and chief executive officer of the AltaVista Co. Shrock was instrumental in Compaq's recent $220 million purchase of Shopping.com.

Shrock promises that AltaVista's business model will enable it to beat many of its competitors in the already-crowded field.

"We will measure ourselves on customer loyalty and revenue growth and will do this by giving users what they want faster and with fewer page views. Users may actually spend less time per visit on AltaVista, but because they will get better results faster, they will come back more often," he said.

Speaking on the Hotmail-AltaVista tie-up, Laura Jennings, MSN's vice president, said the agreement will be a win-win for the companies and for Internet users.

"Users of AltaVista will enjoy the most popular e-mail system in the world and users of MSN will have access to the largest search index on the Web in any of 25 languages. Microsoft and Compaq will be able to make use of each other's strengths and investments in their respective technologies to provide greater value to their customers," she said.

Speaking on MSN's decision to drop Inktomi, Jennings characterized the company's relationship as a valued partnership and said MSN would look for ways to work with Inktomi in the future.

"Inktomi has a quality search product and we have been pleased with the level of service provided and our partnership. MSN continues to value the relationship we have with Inktomi and we look forward to ways we can work together in the future," she said.

David Peterschmidt, Inktomi's president and chief executive officer, echoed Jennings' comments.

"While we are disappointed with events today, we hope that Inktomi and Microsoft will find new ways to work together across our product lines," he said.