Troubled Inktomi (Nasdaq:INKT) has been jettisoning staffers and cutting back, but it still decided last week to fork over $12 million in cash and shares for former Israeli data-organization startup



Quiver, a privately-held company, was launched in 1998 under the name Nectaris by Ofer Mendelovich and Avi Segal. Altogether Quiver has raised $22 million in venture financing. In January 2000 it secured $13 million according to a post-money company value of $50 million.

Its third found, in January 2002, secured it $5 million.

The acquisition by Inktomi therefore prices the startup significantly below the amount of money it has raised, and below its most recent financing round. It also means that its backers have lost much of their investment.

Quiver designed an Internet search engine that incorporated technological and "human" elements. After changing business model in 2000 and firing 20% of its staff, the company began to focus on developing data-management and categorization software for online and enterprise content.

At its peak Quiver, now based in San Mateo, California, had 50 employees. Its remaining 20 workers will be taken into Inktomi.

Foster City-based Inktomi has been sharply cutting its costs as its share sank, tumbling to 80 cents last week. At its peak in 2000, Inktomi stock sold for $241.5 per share. Inktomi, which engages in information retrieval solutions, is nonetheless committed to strategic technology acquisitions, according to its president and CEO, David Peterschmidt.

On July 17 Inktomi announced a 40% workforce cut after an unexpectedly enormous fiscal third quarter loss of $235.7 million, or $1.62 a share, compared with a net loss of $155 million, or $1.22 a share, a year earlier. The company has eliminated some 400 jobs this year, leaving it with about 375 people before taking Quiver's staff of 20 on board.

The Quiver acquisition underscores Inktomi's new emphasis on search, as it stops selling networking products that improve the performance of websites.

Quiver's investors include LMS Capital, Weiss, Peck & Greer, Hummer Winblad Venture Partners, London Merchant Securities, El Dorado Ventures, Weber Capital and Partech International and Al Hirschfeld, formerly the manager of Colombia and 20th Century Fox studios.