Compaq's Altavista unit fleshed out its portal strategy last week by making its second acquisition in just over a month.
The subsidiary agreed to purchase privately held Zip2, a Californian maker of local information sites, for an undisclosed amount in cash. The move follows a rash of similar mergers and acquisitions by internet portal companies such as Yahoo, America Online (AOL) and Excite, which have been working feverishly over the past few months to expand their Websites.
Although Altavista has been slow to react, it surprised analysts last month by saying it would acquire e-commerce site Shopping.com for $220 million. But the purchase hit a snag when disgruntled financial advisers filed a $10 million lawsuit against it.
Commenting on its purchase of Zip2, Rod Schrock, president and chief executive of Altavista, said the manufacturer hoped to become a leading e-commerce destination for internet users. 'We will measure our success by our ability to reach the top three in revenue by year end, 2002,' he added.
Zip2 is in partnership with local US newspapers to develop Websites that present local information. The firm generates revenue from licensing software, consultancy and by taking a share of advertising revenues. It maintains that more than 160 Websites have been built using its proprietary software.
Schrock said Altavista hoped to combine Zip2's technology with Shopping.com's e-commerce backbone to enable Zip2 customers to move into the world of online commerce. He hoped the move would also boost traffic to Altavista.com, Shopping.com and Zip2's partner sites by adding links to them.
Barry Parr, director of internet and e-commerce strategy at IDC, said Zip2 was a good fit for Altavista, but added that Compaq had to do more if it wanted to keep up with Yahoo and AOL.
'Altavista is still an also-ran. Beyond the search engine, everything it has is generic. It has a way to go until it has a complete package.'
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