Inktomi Exits Enterprise Search

Inktomi has sold its enterprise search product to Verity for $25 million and will focus exclusively on its Web search and paid inclusion business.

The cash deal should close within 30 to 60 days, after which Inktomi will be cash flow positive.

“(The sale) puts Inktomi in a much stronger financial position while enabling the company to apply all its resources on a growing market in which it has leading technology, distribution and marketing services,” David Peterschmidt, Inktomi’s president and CEO, said in a statement.

The Foster City, Calif., company is bullish on its chosen sectors. According to Salomon Smith Barney, Web search and paid inclusion is a $1.4 billion market with the potential to grow 30 to 35 percent per year to 2004, and 20 to 25 percent per year to 2008.

Inktomi’s Web search is used by portals, including Microsoft’s MSN. The company will be introducing new features to the product next week that it hopes will differentiate itself from competitors such as Google, FAST and AltaVista.

Paid inclusion helps Web site operators drive traffic by ensuring that content is included and frequently updated in the Inktomi Web Search index. Inktomi has more than 100,000 customers for the service and recently inked agreements with Amazon.com, eBay and Walmart.com to expand their participation in the program.

For Verity’s part, it picks up an established product (which was recently upgraded) with more than 2,500 customers. The Sunnyvale, Calif., firm sells software that powers e-commerce sites.

Verity will offer jobs to selected development, sales and marketing and support workers from Inktomi’s enterprise search division.