Internet portal AltaVista has cancelled its plans to launch an IPO.
Internet portal AltaVista has cancelled its plans to launch an IPO, nine months after the company was originally supposed to float. The company postponed its plans in April when Internet stocks first crashed. Now, there seems little chance of a recovery anytime soon, if ever.
As one of the very first search engines, AltaVista had a lot of users in the early days of the Internet. However, its owner, mainframe computer manufacturer Digital, at the time didn’t see the potential for profits from eCommerce. By the time Compaq bought Digital in 1998, companies such as Yahoo! and AOL had already established a stronger user base by making their sites accessible to less tech-savvy online users, providing tailored links rather than just blunt searching tools.
When Internet stocks boomed in 1999, Compaq sold a majority stake in AltaVista to VC firm CMGI, realizing there could be substantial potential for the site. AltaVista aimed to develop into a portal for consumers, providing news and information as well as tailored searching facilities. The company also set up an ISP in the US, with plans to expand into the rest of the world. However, the firm did too little too late to establish itself. Yahoo! and AOL had already built up substantial brand loyalty. AltaVista found itself with a lossmaking ISP business combined with a lossmaking portal business.
AltaVista is in dire straits. It has closed its ISP operations, axed a quarter of its staff and lost two CEOs in six months. Its only chance at a profitable future is to follow Deja.com. Deja started as a search engine for Internet discussions, expanded to become a shopping portal during the boom, but last year sold off its shopping operations and went back to its core business, funded by advertising. AltaVista has enough users to be viable as an advertising-funded content site. However, it will need to lose a lot more staff to cut costs, and will certainly never be an eCommerce giant.
