AltaVista gunning for Yahoo!

Sometime later this year, Rod Schrock will join the swelling ranks of the cyber wealthy when AltaVista goes public.
Written by Charles Cooper, Contributor

Considering the lofty valuations attached to everything with .com suffixes these days, a successful debut and accompanying run-up in shares of AltaVista wouldn't surprise Schrock, the president and CEO of the Compaq-owned Web portal. "In the context of the Internet totally transforming capitalism, [rich valuations] are not crazy because the Internet will fundamentally reshape capitalism," he said.

A bigger challenge looms: Compaq got into the Web portal race relatively late in the game. But Schrock believes AltaVista is closing the gap and can continue to deliver the kinds of numbers that will keep investors interested. AltaVista does not yet break out specific figures, but Schrock says the site grew by 187 percent in the first quarter compared to the same period in 1998.

Those are impressive numbers -- as well as impressive claims -- but the extent of AltaVista's success is by no means clear. Even though its AltaVista subsidiary now chalks up 25 million unique visitors each month, it has been slow building the sort of wide-ranging brand identity associated with Yahoo!, America Online and the other leading lights in the Internet portal constellation.

(On Wednesday, Excite, which reported its quarterly earnings, said daily traffic soared to 77 million page views per day in March, up 33 percent from December.) "This is a long march strategy," Schrock said. "It's not an overnight, snap your fingers kind of thing."

Along the way, AltaVista has bought up Zip2, an Internet Web directory company that develops local content guides, and online retailer shopping.com, as well as taking low-profile equity investments in a handful of Internet companies. The idea is to create a single cyber shopping and information destination. "We're growing as fast as Yahoo! and we intend to grow faster than Yahoo! for the year," he said. "The number one thing that Yahoo! customers ask is to bring back AltaVista."

Then he paused for effect. "Not that we're going to do that," he laughed.

A spokeswoman for Yahoo! said that was the first time she'd ever heard that bring-back-AltaVista news, and wasn't able to substantiate Schrock's claim. "And I sit in executive meetings all day long," said the spokeswoman, Sarah Ross.

By any measure, AltaVista represents a key pillar in Compaq's strategy to better position itself as an Internet firm -- as well as a way to increase the value of the computer maker's battered stock price. The idea is to collect under a single umbrella the products and services Compaq offers to help businesses build their Internet operations. And with its control of a popular Web site -- after the spin-off Compaq will still exercise majority control -- the company expects to do a substantial business in e-commerce.

One analyst who follows the Internet portal market said he liked AltaVista's chances because of the Compaq connection, but was still waiting to see how well the company would execute on its plans. "Fact is they've got great technology and great potential synergies but they haven't been anywhere as street smart as Yahoo! or Excite about extending their brand name," said the analyst who asked to remain unidentified. "Remember, this is cyberspace where big doesn't count as much as smart."

Indeed, Schrock said that instead of defining itself as exclusively a new media company, AltaVista will become more of a platform where media and commerce gets delivered to customers. He also raised the possibility that other companies might eventually build their e-commerce sites upon an AltaVista base.

At the same time, AltaVista is getting a boost from Compaq's inclusion of a key on every Prosignia and Deskpro computer that takes users directly to the Internet site. The company is also looking to set itself apart by offering advertisers the chance to get their Web sites listed at the top of search results. That's something that other big Internet companies have so far chosen not to do.

Schrock, who said the number of keywords will initially be limited to 500, insisted that users would not be shortchanged because of commercial considerations. "One thing we are definitely making sure is that the regular results are still there," he said. "We think this is a benefit to our users. We really did do the research ahead of time and in many cases found that this feature will have more relevant results than the index."

But Schrock allowed that AltaVista may invite criticism that it's putting up its top sites for sale. "We are having people look at every one of them to make sure it is relevant," he said. "We think that model makes us attractive to smaller businesses."

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