CMGI's cash constraints.
"The question is, does CMGI have the cash and resources to make use of that technology?" said one banker. "AltaVista has all these patents, and when you think about how a search engine can be integrated into a business-to-business product such as supply-chain management, there is a compelling product to be produced."
This has led some in the market to believe that CMGI would be willing to accept a dilution of its stake in AltaVista in return for a cash investment that would speed the group's path to profitability and the exploitation of its technology.
One source said senior CMGI executives had told him recently that a strategic partner for AltaVista would be very welcome.
Anthony Lorenzo, an analyst at Credit Suisse First Boston (dossier), said he would not be surprised if AltaVista becomes the next CMGI company under the gavel. "CMGI has said that they are going to look at any opportunities that are out there for them among their businesses in order to get some cash. It is a good search engine and there are probably a lot of opportunities for it."
One thing is certain: If AltaVista does go up for sale, CMGI will not get anything like the $2.3 billion it paid Compaq Computer (CPQ) for the business in June 1999.
AltaVista's Tale of Woe
AltaVista - meaning "the view from above" - is a plagued company. Former employees joke that it's cursed. The firm has the distinction of having had IPO plans shelved on three occasions, each time by a different parent.
April 1995 - AltaVista is conceived by Digital Equipment Corp. engineers. The idea was to develop a software "spider" to crawl the Web, indexing and presenting the information it found.
December 1995 - AltaVista launches at www.digital.altavista.com - a move that will turn out to be an expensive blunder.
1996 - AltaVista wins the contract to power searches on Yahoo (YHOO). Also hires DoubleClick (DCLK) to sell ads on its site, which becomes a top 10 Web destination.
1997 - Digital begins to think about an IPO, but plans are aborted.
1998 - Compaq buys Digital. The rumor is that Digital's Web-averse management literally gave AltaVista away, valuing it at nothing.
1999 - Compaq announces it is taking AltaVista public. First, though, it must buy the Altavista.com domain name - at a record price: $3.3 million. The IPO is shelved and instead AltaVista is sold to CMGI.
January 2000 - CMGI share price peaks at over $165, valuing the group at over $50 billion. It has since sunk to $3, valuing the group at under $1 billion.
April 2000 - CMGI puts off any thoughts of an AltaVista IPO.
Summer 2000 - AltaVista scraps plan to float its European subsidiary after admitting that a planned flat-fee Internet service in the U.K. was never viable. U.K. head Andy Mitchell departs.
October 2000 - AltaVista chief executive Rod Schrock quits, and CMGI announces job cuts.
January 2001 - AltaVista's IPO is pulled for the third time, with CMGI blaming market conditions. It also announces a third round of job cuts.
