AltaVista, the flagship consumer-focused business of Internet incubation empire CMGI (CMGI) , said Friday it was cutting a quarter of its staff in an effort to become profitable and refocus its business.
The move comes only a week after CMGI Chairman David Wetherell
announced a reorganization of CMGI, the parent of AltaVista and 16 other companies and an investor in scores more. But like Wetherell, AltaVista COO Greg Memo says the newly revealed strategy has been long in the making.
"We've been working on this announcement for six months," Memo says. When AltaVista pulled its planned IPO last spring, he says, "The market sent a very clear message that they were rewarding profitability in the Internet space." AltaVista says it will be profitable, excluding amortization expenses, in the quarter ending Jan. 31, 2001.
At midday Friday, CMGI's shares were down $1.81, or 4.8%, at $38.31. The company is scheduled next week to report financial results for the fiscal year ended July 31, marking the first time it will break out financial results for its six lines of business.
As part of its new business plan, according to Memo, AltaVista will attempt to become a category leader online search -- the original focus of the site, which started out as an offshoot of
, now owned by
That means that AltaVista is dropping its effort, launched with great fanfare last October, to be a media portal. Many of the 225 jobs AltaVista is cutting from its 900-person operation, in fact, are coming out of this media group, which wrote original stories for the site and built Web pages around various news stories and other themes.
The rest of the job cuts -- 175 of which are taking place Friday and the rest over the next months -- relate to AltaVista's consolidation of its consumer shopping search operations, originally known as
Memo described several measures that AltaVista is taking to improve its search technology and the economics of its search business. To help make searches more relevant to its users, the firm will attempt to gather more information about users through registration. That will enable AltaVista to know that a person typing in a search for "restaurant," for example, lives in San Francisco -- and would probably be most interested in San Francisco restaurants, Memo said.
Like other sites, AltaVista also hopes to use such registration information to better target advertising to users, and to gain higher advertising revenues from these more-targetable users.
Memo said that the company was interested in doing pay-for-performance searching such as that done by
, in which companies pay to be prominently placed among search results and pay for each seacher who clicks through on that result.
In another measure to speed up profitability, AltaVista said it would be accelerating the transition of strategic ad sales from ad sales firm
to AltaVista. DoubleClick fell 1.6% Friday to $38.56.