Tick tock, what’s AltaVista
worth? Nearly two-and-a-half years after originally filing for an IPO (and
later canceling) AltaVista is once again back in the limelight, only this time
as Compaq’s offspring seeking another way to bring its value to the surface.
But in a world of at least five search services and more vertical portals, can
AltaVista find its value?
As we’ve done in WEBDEX each week we’ve been
valuing AltaVista on a private market value basis for several years now.
During that time, privately valued assets have always been at a discount to
their public peers for several reasons. First is capital leverage, ability to
grow and use stock as currency.
That attracts talent which grows the company
which (the theory goes) creates more value. Talent wants stock options. Not
public? No talent very long. Basic Internet economics which AltaVista missed
out on so far.
Let’s look at AltaVista in this historical snapshot:
While
Compaq has been juggling with AltaVista (or ignoring it) NBC rescued SNAP from
CNET, Disney snapped up 43% of Infoseek for $430 million, and @Home made a
stone’s throw $6.7 billion bid for Excite(NASDAQ:XCIT).
Even smaller portal
Go2Net (NASDAQ:GNET) began creeping into the larger arena with its buys of
HyperMart and launching of WebMarket for shopping.
Circa 1996-97, AltaVista
lost its Yahoo contract, Inktomi(NASDAQ:INKT) made pure search a commodity, and
the search group en toto made haste to be AOL’s of the Web.
Meanwhile,
AltaVista became part of (“part” is probably too strong a word), rather
AltaVista “tagged along”with Compaq’s $9 billion acquisition of Digital
(AltaVista’screator).
Fast forward to today and AltaVista may go IPO or sell
a part of itself in order to free itself from the shadow of the PC
Goliath,untether some value in stock, and incentivize its crew with
options.
To its credit, AltaVista has produced a powerful search service,
multi-lingual, and cleaned up the design in recent months to look more like a
content hub.
Said another way, it got a wash and wax and now is on the lot
where the other vehicles go for more than $1 billion on a bad day. Infoseek is
closest in our view to AltaVista in users and possible valuation. The
pre-Disney Infoseek that is.
Our analysis of AltaVista estimates that its IPO
value (market value at IPO) could be $600 million to $650 million, or $60 to
$65 per unique user.
On a post-IPO valuation basis we estimate AltaVista
could fetch $1.3 billion to $1.5 billion in the aftermarket, based on it
realizing the “user-trage” gap between the private and public entity and
raising its profile on Wall Street as a contender.
We think the value may be
there for the unfolding if AltaVista can get in gear as an “Internet” company
apart from its two PC-era parents (Digital and Compaq).
The lingering
question is how many search services (or flavors of vanilla) will advertisers
support? SNAP, Infoseek and Excite have taken their exits, can AltaVista now
make its entrance?