Digital Equipment Corp, in a change of heart about spinning off its AltaVista Internet Software Inc business, has canceled its planned initial public offering and will integrate the internet search engine unit back into the main company. DEC originally planned to sell 20% of AltaVista (CI No 2,978) and raise some $50m in an attempt to help it on its way to the top of the internet business market. It has retained Lehman Brothers Inc since last August to coordinate the proposed offering. However, the move was always a bit surprising, since AltaVista was one area of the somewhat troubled company that looked set for impressive growth, and the AltaVista brand is extremely well established in the internet arena. Just last week, DEC was talking up the unit’s performance, saying it expected profitability by the second half of this year (CI No 3,184). The company maintains the flotation was delayed because of subdued market acceptance of other search engine companies such as Yahoo Inc, although that company’s shares having been rising fairly steadily for almost a year now, and are trading just off their 52-week high. Certainly the market has been more cautious of late, since the halcyon days of vastly inflated valuations such as Netscape Communications Corp’s flotation in 1995 (CI No 2,794). AltaVista will now form part of the company’s products division. Maynard, Massachusetts-based DEC said the re- integration comes as a result of the company’s restructuring plans announced in April, which coincided with third quarter results that saw net profit down 59% at $51.0m (CI No 3,143). The company will attempt to cash in on the AltaVista brand as a key differentiator in its Internet offerings.
