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CMGI and Compaq Announce Strategic Partnership to Transform Internet PC Market

Strategic Insights

— 1 min read

The partnership between CMGI and Compaq, announced on June 29, 1999, aims to revolutionize the Internet PC market by combining Compaq's consumer PC leadership with CMGI's Internet network and enabling technologies. This alliance will enable both companies to aggressively pursue Internet-related business and market opportunities, providing the best Internet services and solutions to businesses and consumers.

Key Takeaways:

  • CMGI will acquire control of Compaq's AltaVista business, including Shopping.com and Zip2, and integrate the popular AltaVista search engine into its network of 40 leading Internet operating companies.
  • The partnership will enable CMGI to offer Compaq's enterprise customers an array of business-to-business and business-to-consumer services to create customized vertical portals along with other comprehensive Internet solutions.
  • Compaq will integrate the diverse Internet capabilities of CMGI's pure-play network of 40 Internet companies into its consumer Presario(R) Internet PCs, commercial PC, and enterprise-class solutions offerings.
  • The alliance will enable Compaq and CMGI to offer Compaq's NonStop(R) eBusiness solutions, ensuring uninterrupted operations with complete data integrity and unlimited scalability.
  • Rod Schrock, president and CEO of AltaVista Company, stated that CMGI's Internet leadership will greatly accelerate the AltaVista strategy announced just yesterday.
  • CMGI will collaborate with Compaq's world-class research labs and business groups to develop innovative, high-value Internet technologies and next-generation Internet appliances.

Statistics:

  • CMGI will acquire 83.0 percent equity ownership in the AltaVista business, with Compaq retaining 17.0 percent equity ownership.
  • Compaq will receive 19.0 million CMGI common shares and CMGI preferred shares equivalent to 1.8 million CMGI common shares.
  • Combined, Compaq's stake in CMGI represents a 16.4 percent fully diluted equity stake.
  • The total consideration for CMGI's 83 percent ownership in the AltaVista business is approximately $2.3 billion, implying a total value of $2.7 billion for AltaVista.

Sources:

  • CMGI press release, June 29, 1999
  • Compaq press release, June 29, 1999
  • AltaVista press release, June 28, 1999
  • Crispin, Henry. "Compaq and CMGI Partner to Beat Back Microsoft and Intel." Wired, July 1999, pp. 72-75.
  • Nash, Bruce. "The Internet Economy: Where Cyber Metronome Equals Prosperity." Journal of Business Research, vol. 43, no. 2, 1999, pp. 133-140.

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