AltaVista Exec Departs; What Hath Rod Schrock Wrought?

CEO's departure raises questions about the CMGI unit's goals and their attainability.
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Following Rod Schrock's

announcement Thursday that he was leaving his post as CEO of

CMGI

(CMGI)

subsidiary

AltaVista

, whoever ends up taking over his job will find a very long to-do list waiting on his desk.

AltaVista, the flagship consumer-oriented business operated by Internet empire CMGI, has set ambitious plans for itself over the next 12 months -- building new revenue streams, staking out patent claims and perhaps even going public.

The plans, which AltaVista first broached in an early September

reorganization, are key to building AltaVista into one of the survivors of the dot-com meltdown that has overtaken the Internet. And AltaVista is in turn one of the key components of CMGI's business -- the Search and Portals segment in which the search firm sits accounted for $98 million, or 26%, of revenue in CMGI's fourth quarter, making it the company's second-largest revenue line.

CMGI's stock rose a dollar Thursday to close at $16.44.

As Schrock explained in a presentation and an interview at CMGI's semiannual

analyst day last week, AltaVista is embarking on several new strategies after dumping its plan, first announced last fall, to become a media portal.

In Search Of

One element of AltaVista's business plan is to reap more money by licensing its technology -- for example, to private companies that need to index the information on their internal networks to make them more easily searchable by employees.

In addition, AltaVista hopes to extract more money from the 50 million daily search queries conducted either on AltaVista's own site or other Web sites to which it syndicates its search engine. Last week, Schrock illustrated about a half-dozen ways the company could make money from search listings, such as by appending promotional offers, multimedia advertisements and relevant links to local retailers to search results.

AltaVista hopes to improve its technology by tailoring searches to its anonymous user profiles. That way, the company said, it would be able to distinguish between the person who types in "mustang" in a search for information about horses and the person who enters "mustang" in a search for classic cars. Along with the appropriate search results, AltaVista would be able to make more money by more personalized advertising, too.

Patents a Possibility

AltaVista apparently is also planning to expand into the semicontroversial field of business process patents. Schrock said the company has applied for patents in the area of Web marketing services. "We do believe we have services that are patentable, that give us revenue beyond the AltaVista site in the long run."

Acknowledging that there has been some controversy surrounding Internet patent claims, such as

Amazon.com's

patent on one-click ordering, Schrock said AltaVista's "service-oriented" patents were different: "It's easily documentable," he said. "We're talking about services that haven't been done before and are currently not done on the Internet."

But those patents and most of AltaVista's new services are off in the future, Schrock had said last week. "What we've presented is a direction it's going to take over the next 12 months to put in place," he said.

The Family Calls

One week later, Schrock said his departure, which was in the works before last week, won't change any of these plans. "The game plan is right on track, and it's going to remain the same," he said. "We had worked to put all this in place before I left." While the company seeks a new CEO, Schrock's executive duties will be shared by president Greg Memo and chief financial officer Ken Barber. Both joined AltaVista when it was spun out of

Compaq

to become an independent company January 1999. Schrock, who was head of Compaq's consumer products group, joined at the same time.

In the face of inevitable skepticism over Schrock's stated reason for his departure -- in part, he said he's leaving to spend more time with his family -- Schrock said, "This was voluntary on my part, and it is, in fact, true."

As long as four years ago, Schrock said, he was planning to take time off with his family to attend the 2000 Summer Olympics. In fact, Schrock ended up not going to Sydney. "I went past my time-frame goal," he said.

Let's see whether the Schrock-less AltaVista makes the same mistake.