September 15, 2000 9:50 AM PDT

AltaVista slashes work force by 25 percent

Web portal AltaVista today trimmed its work force by 25 percent, or 225 people, to focus its efforts on its search engine and to accelerate its path to profitability.

As previously reported by CNET News.com, the company will consolidate its operations in California into its Palo Alto headquarters. AltaVista's Shopping.com offices in Irvine, Calif., will be reduced, and the majority of its remaining staff will relocate to its headquarters.

With the layoffs and restructuring, AltaVista expects its North American operations to make a profit by Jan. 31.

"While many of these business decisions have been difficult, we are now in a position to unleash our search expertise with a clear, singular focus to penetrate every layer of the search market for both consumers and businesses," Rod Schrock, chief executive of AltaVista, said in a statement.

The layoffs--the second round of staff cuts for the company in five months--are another instance of the company's attempt to refocus its efforts in a highly competitive market. AltaVista and its parent, CMGI, had been trying over the past year to transform the online veteran into an all-in-one Web portal to compete with market leaders Yahoo, America Online and the Microsoft Network.

Since late last year, however, analysts have been predicting a shakeout for all-in-one sites, suggesting that only the top two or three sites could survive.

"Wall Street won't tolerate anymore portal strategies that require them to become everything to everyone," said Yankee Group analyst Emily Meehan. "AltaVista is trying to be the best in the search area, offer the best functionality. Narrowing their focus I think is the right thing to do."

As Yahoo and AOL continue to distance themselves from the rest of the portal pack this year, AltaVista and other second-tier players such as Disney's Go.com, NBCi's Snap and Excite.com are struggling to reinvent themselves. Long considered a pioneer search engine on the Web, AltaVista hopes to become a challenger to popular rival search services, such as Google and GoTo.com.

AltaVista had hoped to go public in April but postponed its initial public offering after the Internet market soured. Then in May it launched Raging Search, a simpler, faster search engine, to compete with Google.

AltaVista, including its Shopping.com and Raging Bull subsidiaries, ranked as the 10th-most-visited site on the Web in August, according to PC Data. Yahoo, AOL and MSN held the top three positions, respectively.

The company has sputtered despite major investment backing from CMGI, which acquired the company from Compaq Computer last spring for $2.3 billion. Late last year, CMGI announced a $120 million advertising campaign to promote the site as an all-inclusive Web portal.

The restructuring at AltaVista coincides with a CMGI announcement earlier this month that it would scale back the number of its operating companies and that it was abandoning plans for a $1.5 billion international Web venture fund. CMGI has been on a mission to make its divisions profitable, sources said.

AltaVista spokesman David Emanuel said the restructuring was not ordered by CMGI.

News.com's Greg Sandoval contributed to this report.

 

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