Compaq May Be in Talks to Sell AltaVista
Compaq Computer, the money-losing personal computer company still struggling to digest its acquisition of Digital Equipment Corp., may be on the verge of selling one of Digital’s best-known units.
Houston-based Compaq is reportedly in talks to sell the search engine AltaVista to CMGI, the Andover, Mass.-based holding company whose best-known investment is the Internet company Lycos.
Compaq spokesman Alan Hodel said Wednesday that the company still plans to take AltaVista public instead, but noted that those plans could change. CMGI said it had no comment and added that it’s “going to stay ‘no comment’ for a while.”
Compaq shares fell 38 cents to close at $23.44 in New York Stock Exchange trading Wednesday. CMGI investors, apparently worried about a purchase that could cost as much as $2 billion, bid down CMGI stock as much as $4 to $91 before it recovered to close at $98.94, up $4, in Nasdaq trading.
Other investors and analysts were skeptical of the reports in Wednesday’s Wall Street Journal. CMGI helps fund companies at early stages, rarely making even small acquisitions.
“I would be surprised to see it consummated in the near term,” said Phil Rueppel, a computer industry analyst at BT Alex. Brown in San Francisco. “Compaq is not in such dire straits that it needs the cash right away.”
Compaq is looking for a CEO in the wake of Eckhard Pfeiffer’s ouster earlier this year. Rueppel said it would make more sense if the company waits until it has new leadership before making major strategic changes. Then again, company co-founder and Chairman Ben Rosen has promised to move quickly to right the company.
Just before Pfeiffer was asked to resign, the company said it would package its high-end computer servers, which support corporate networks, with a more intense consulting effort to help customers do business over the Web.
“It seems that there has been at least some talk,” Rueppel said of Compaq and CMGI, and “to divest of anything that size would add to the focus of building personal computers and servers. But any shift of strategy of this magnitude and you would want to have a new CEO on board.”
Analysts placed even less credence in speculation making the rounds this week that Gateway, the direct computer seller, would buy Internet access provider EarthLink.
While computer makers are teaming more closely with Internet service providers, and some PCs are becoming little more than stripped-down appliances that allow e-mail and Web surfing, Gateway already has a joint marketing deal with MCI’s UUNet. Gateway customers can pay the company directly for their Net access costs.
A person familiar with the Gateway-EarthLink situation said that even if something comes to fruition, it won’t be in the next few days.
Dell Computer CEO Michael Dell said this week that Dell will move to offer Web access as well.
