Dot-Com Shakeout Hits 200 Alta Vista Workers

Web portal AltaVista announced Thursday that it is laying off 200 employees, or 25 percent of its workforce.

The company said that the layoffs would primarily affect employees at the company's Palo Alto, California headquarters. AltaVista said that its European offices would only be "minimally affected by the change."

The layoffs leave the company, which is backed by CMGI, with 600 employees.

"AltaVista has not been immune to the softness in advertising," said Peter Mills, executive adviser to AltaVista and managing partner of CMGI @Ventures.

Miller added: "These are challenging times for most Internet and technology companies but we are confident in the steps we are taking to remain strong."

The move comes a week after AltaVista scrapped plans for a US$160.5 million initial public offering (IPO), citing poor market conditions.

Going Wide

For most of its five-year existence, AltaVista has struggled to find an identity in the dot-world. Initially launched as a search engine, the company reportedly spent more than $100 million in a failed bid to recreate itself as a general interest portal along the lines of Internet giant Yahoo!.

The site now offers a comparison shopping page, a customer loyalty program backed by ClickRewards, and auction services through uBid Auction.

Its most recent strategy is to diversify its revenue mix by maintaining its own consumer search site and selling its search software to other companies.

AltaVista said Thursday that its expansion into the search software business is proceeding rapidly, and that it had signed up 87 new customers in the last three months to bring its total roster to more than 1,100 companies.

Hard Times

The most recent round of layoffs is the third for the company in less than a year. In May, AltaVista laid off 40 employees and in September the company let go 225 workers.

Last week's scrapped IPO represents the second time in less than a year that the company has cancelled plans to go public. The company first filed for the IPO on December 17, 1999, but postponed the offering on April 17, 2000 after a drop in the Nasdaq market.

The company was also been hit by the twin losses of former chief executive officer Rod Schrock, who left the company in October, and the surprise retirement of his replacement, Ken Barber, who was to leave the company last month.

AltaVista also dumped its free, ad-driven Internet service provider (ISP) offering in the United States last year, ostensibly because the company that provided its communication infrastructure, 1stUp.com, was going out of business. 1stUp.com is also a CMGI company.

Not Alone

Due to the slowing dot-com economy, a series of Web companies have cut their workforce in recent weeks. On Wednesday, NBC Internet let go 150 employees, or 30 percent of its workforce.

Other layoffs this month include the termination of 700 employees from the embattled eToys, 350 employees from online trading company Ameritrade, and 120 employees from Internet delivery service Kozmo.com.

By all accounts, the dot-com workforce has struggled in the past year. According to industry observers, more than 40,000 dot-com job have been slashed in the past year.