CMGI In Talks To Buy Compaq Internet Properties

CMGI Inc. could announce a deal to purchase AltaVista and other Compaq Computer Corp. Internet assets for $2 billion to $3 billion in stock as early as Thursday.

The Wall Street Journal, citing sources familiar with talks, cautioned no final agreement has been reached. For CMGI, the deal would help transform the Internet investment company into a full-fledged media outlet. AltaVista would be able to capitalize on the CMGI brand name to anchor its Web properties in its efforts to battle more popular portals including Yahoo! Inc..

A sale of AltaVista would mark a change in strategy for Compaq, which earlier this year announced plans to spin-off the search engine and take it public.

Compaq acquired AltaVista when it purchased Digital Equipment Corp. last year. However, since then Compaq has encountered rough weather as its stock price has floundered. It also fired longtime chief executive officer Eckhard Pfeiffer in April.

If CMGI buys AltaVista, it would instantly add one of the top 10 Web sites to its list of assets. It would also acquire e-commerce site Shopping.com and local directory service Zip2.

Officials from both Compaq and CMGI have refused to comment on the speculation, which picked up steam on Tuesday.

The Journal also said AltaVista is planning to relaunch its site by the end of the month to focus on local information. It will also reportedly revamp its online store and add the capability to search multimedia files.