Compaq today confirmed that it is negotiating with CMGI to sell a majority stake in its subsidiary AltaVista. The negotiations are in a preliminary state, according to statements from the two companies.
AltaVista runs http://www.altavista.com, which is a portal offering Web services and links to other sites as well as a search engine. Compaq acquired AltaVista last year as part of its purchase of Digital Equipment, and spun off the site as a separate subsidiary in January, saying it planned to take AltaVista public.
Compaq's decision to sell a majority stake in the company instead is a result of the company's current financial troubles, according to an analyst.
"Compaq probably has enough to do with its primary business. The priorities are not on AltaVista, which has a tremendous potential, but needs attention," said Barry Parr, director of Internet and electronic commerce at IDC.
"An acquisition will therefore be good news for the AltaVista users. CMGI will be able to give much more attention to AltaVista," Parr added.
Compaq's top management team has been drained since April, when CEO Eckard Pfeiffer was ousted. Furthermore, Compaq expects a loss in the second quarter, the company announced last week.
Compaq had no further comment on the AltaVista negotiations, according to company spokesman Alan Hodel.
However, according to the statements the negotiations also include the establishment of a strategic relationship between Compaq and CMGI in order to advance Compaq's Internet presence.
CMGI owns a majority stake in several Internet companies including an 18 per cent stake in Lycos, another portal and search engine site.
When asked why CMGI should be interested in another combined portal and search-engine site, Parr said, "AltaVista is one of the top 10 Web sites, and it has a very strong brand. That is a valuable commodity. Also it has a good technology."
Parr also said the two sites complementary, with AltaVista having the stronger search engine and Lycos having the stronger portal.
"However, I am not suggesting that CMGI's strategy is a fusion," Parr said. Even separately the Web sites would be complementary to each other, he said.