Altavista Co - Altavista Sold To Cmgi Inc. In 1999

ALTAVISTA SOLD TO CMGI INC. IN (1999)

With Compaq experiencing financial difficulties following its acquisition of DEC, AltaVista was sold to CMGI Inc. in mid-1999 for $2.3 billion. CMGI gained an 83-percent interest in AltaVista, with Compaq retaining 17 percent of the company. As part of the deal Compaq received 19 million shares of CMGI stock, a $220 million three-year note, seats on the boards of directors of AltaVista and CMGI, and an interest in the 40 Internet companies operated by CMGI. At the time of the sale, AltaVista was ranked 15th among the most popular Internet sites and had fewer than 10 million separate visitors each month.

In the months following the sale, AltaVista announced a global branding campaign. Initially budgeted for $50 million, some $120 million was spent on the campaign by June 2000. The campaign coincided with the launch of an upgraded and redesigned AltaVista Network, which included features from Shopping.com and local content from Zip2 Corp. Around this time AltaVista also announced it would offer free Internet access to subscribers who were willing to view ads and provide information about themselves. In a month of testing, the free Internet service gained 45,000 users, and by October 1999 there were 500,000 subscribers to the free service. AltaVista also introduced a free "microportal" service, which gave users continual access to their own range of favorite Web sites through a window on their computer desktop.

Following the sale to CMGI, AltaVista cancelled plans to incorporate previously announced services from Microsoft into its portal, including HotMail and instant messaging. Instead, e-mail service bureau Critical Path was tapped to provide e-mail for the new AltaVista portal to be launched later in the year (CMGI was a minority owner of Critical Path). For instant messaging, AltaVista selected the PowWow instant messaging service developed by Tribal Voice.

Gearing up for the 1999 holiday shopping season, AltaVista introduced a major redesign to its Web site at the end of October 1999. Among the major changes was a simplification of its Internet searching technology, which included using subject categories to help users narrow their searches. Another major change involved the site's shopping features. The newly designed AltaVista site would rely less on Shopping.com, which had experienced a high level of complaints about late delivery of merchandise, and add a number of online stores. Other new features included product reviews and comparative shopping.

At the end of November 1999, AltaVista acquired Raging Bull Inc., an online investor chat forum and financial site partially owned by CMGI. Raging Bull was known for developing an online community for nonprofessional stock pickers and was the second most popular online investor forum behind Yahoo!'s stock market and finance section. The addition of Raging Bull was expected to build traffic at AltaVista and serve as the model for other online forums devoted to a wide range of subjects.

The changes AltaVista made to its site started to result in higher traffic. According to Media Metrix, AltaVista was the eleventh-most-visited site in November 1999, up from 15th earlier in the year. In its December 1999 filing for an AltaVista IPO (initial public offering), CMGI claimed that AltaVista was the fifth-most-popular Internet search engine. However, changing market conditions in 2000 would prevent AltaVista from going public, and the IPO was later withdrawn. Other developments at the end of 1999 included the launch of an AltaVista site in the United Kingdom, a European advertising campaign, and local rollouts in France, Italy, and Germany. Alta-Vista planned to expand its European presence to 18 countries in 2000.