CMGI Deal Brings Compaq Many New Partners

A new deal between Compaq Computer Corp. (NYSE: CPQ) and CMGI (Nasdaq: CMGI) promises to give the computer manufacturer’s operations executives plenty to do on several different fronts. With a 16.4 percent stake in CMGI — a “diversified Internet operating company” — the firm is now the largest outside shareholder in CMGI. Meanwhile, CMGI bought an 83 percent stake in the Compaq-owned Alta Vista search site company.

Compaq received 19 million CMGI common shares, CMGI preferred shares equivalent to 1.8 million common shares and a $220 million three-year note. Based on Wednesday’s closing CMGI stock price of about $85 per share and including the three-year note, the deal is worth nearly $2 billion to Compaq. As reported, the deal won kudos from Wall Street when it was first announced in late June, driving CMGI stock up more than $4 to $102 per share.

In addition to expanding AltaVista, CMGI will help Compaq implement products developed by CMGI’s Engage Technologies, Inc. (Nasdaq: ENGA) and develop joint marketing projects with Inc. “The strategic partnership with CMGI will dramatically enhance Compaq’s Internet position and enable us to offer the most compelling Internet-enabled products, solutions and services to our customers,” Compaq President and CEO Michael Capellas said.

Expanding Compaq’s Reach

The AltaVista alliance has already begun, as both companies have begun focusing on expanding the search site’s capabilities and developing new Internet appliances for it. According to CMGI Chairman David Wetherell, “the integration and build-out of AltaVista is on schedule and represents a very real opportunity for significant growth through the integration of various CMGI related services.”

Engage brings Compaq its profile-driven Internet marketing technology, including the Engage Precision Profiling and Accipiter AdManager technology. Compaq will employ those programs on its own Web site to personalize Web content, banner advertisements, special offers and promotions.

With its 30 percent stake in, CMGI gives Compaq placement on the and Web sites. Compaq will become the premier PC vendor on those sites and will conduct joint online and offline marketing programs with the company. Compaq and will share in sales of computer goods, online subscriptions and other genealogy-related products. In addition, they will develop a co-branded Web page to link and with and its online store.

About CMGI

CMGI, based in Andover, Massachusetts, holds an interest in dozens of Internet-related companies. Its majority-owned subsidiaries include Engage, Planet Direct, ZineZone, NaviSite and NaviNet.

The company’s @Ventures affiliates have ownership interests in Lycos,,, HotLinks and many others.

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