Compaq hives off AltaVista Internet search service

Compaq Computer's announcement this week that it would spin off its AltaVista Internet search service as a independent Web portal site may be a case of too little too late, according to industry experts.

Compaq will try to ride the current Internet stock mania and deploy its vast assets as the largest maker of personal computers to boost AltaVista into the top ranks of mega-sites that combine search, shopping, email and a wide range of entertainment and financial services. But analysts view the effort as an uphill battle given the head start enjoyed by Yahoo!, Lycos and major portals owned fully or partially by America Online, Disney, @Home and NBC.

"The window has closed on being one of the top destination sites on the Internet," said Mr Paul Gillin, editor of Computerworld, a trade magazine. AltaVista would do better, he said, to play to its strength - improving and marketing its highly regarded search-technology "engine".

Instead, Compaq - which announced fourth-quarter revenues and earnings ahead of analysts' expectations on Wednesday - plans to raise funds for the AltaVista portal with an initial public stock offering.

"It's important that we show we can deliver great services" before going public, said Mr Rod Schrock, a Compaq senior vice-president who was named chief executive of the AltaVista Co.

Mr Schrock acknowledged that an IPO may take place this year, given that Compaq has guaranteed funding for one year only. Compaq, which employs more than 2,200 people in the Republic took ownership of AltaVista, formerly a division of Digital Equipment, when it acquired Digital last year.

Mr Schrock said that AltaVista already enjoys some key elements for success, including Shopping.com, a leading consumer site that Compaq recently agreed to acquire for $220 million (€194.7 million). AltaVista will integrate search and buying services to boost online sales.

And keyboards sold with Compaq Presario PCs include a dedicated AltaVista button, with plans to extend the feature to other products - a move likely to drive considerable traffic to the site.

The company also announced on Tuesday that AltaVista will gain a self-branded version of Microsoft's Hotmail email product and will integrate instant-messaging services being developed by Microsoft. The two companies will jointly build Web-based community features. In return, Microsoft will obtain AltaVista's search engine for the Microsoft Network, or MSN.