Compaq Plans Spinoff, IPO for AltaVista

Compaq Computer
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

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

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

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