Compaq Set to Buy

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Compaq Computer Corp., Houston, will expand its e-commerce capabilities by acquiring, a struggling online retailer that will be paired with Compaq's Alta Vista search engine to offer shopping and other services through the Internet.

Compaq agreed to pay $19 a share, or $220 million, for, Corona del Mar, CA, a publicly owned entity whose assets consist primarily of transaction software that lets consumers order and pay for a range of products and services from the site and links the orders directly to suppliers.

"Their attraction to our company was the combination of the breadth of our product line and our technical expertise," said Frank Denny, president/CEO of "We developed all of our software inhouse. [Compaq is] closing the loop between technology, information and e-commerce."

Compaq entered the realm of Internet access with its acquisition in June of Alta Vista parent Digital Equipment Corp., but it had not yet established a proprietary system for broad-based online commerce. The company has an online shopping area on the Alta Vista home page that provides links to various other e-commerce sites, and in November Compaq launched direct sales of its own personal computers through its own Web site (

The acquisition of, however, will give Compaq's Alta Vista Internet portal a well-established e-commerce component that has links to more than 1,000 suppliers.

"Our intent is to make Alta Vista the leading guide for both information and e-commerce on the Internet," said Rod Schrock, senior vice president and general manager of Compaq's consumer-products group.

A Compaq spokesman said Alta Vista would continue to divide its home page into distinct information retrieval and e-commerce components, with the left side of the page devoted to search features and the right side devoted to online purchasing features. Alta Vista ( is the ninth-most visited Web site on the Internet, the spokesman said, and is expected to drive considerable traffic to

About 100,000 consumers have made purchases on in the past 15 months, Denny said.'s Web site is divided into 63 merchandise and service categories listing more than 2 million branded items, including computers and software, business supplies and services and a range of such general consumer merchandise as books and magazines, jewelry, musical instruments and camping gear. All items are shipped directly from the suppliers with which has established partnerships -- the company has no warehouse facilities. employs 150, including several veteran merchandise buyers from the retail industry. It has not been a profitable enterprise, however. The company, whose stock trades on Nasdaq's Bulletin Board exchange, posted losses through three quarters ended Oct. 31 of $18.95 million, on just more than $4 million in sales. The company's fiscal year ends this month.

Despite's losses, analysts said they thought the acquisition would benefit Compaq, which as been seeking to enhance the value of its Alta Vista search engine.

"Strategically, it's a smart move by Compaq," said Wendy I. Abramowitz, an equity analyst with Argus Research, New York. "I think it will help their Alta Vista Web site as far as the portal side of the business."

Compaq had been so preoccupied with other issues, including the assimilation of Digital Equipment and corporate downsizing, that it hadn't devoted as much attention to enhancing Alta Vista as it otherwise would have, she said.

In other news, said it would relocate its headquarters to the University of California's Irvine campus and convert its current 8,000-square-foot office into a customer service call center. As part of the move, reached an agreement with the university's Irvine's Business and Computer Science and Technology schools to provide on-the-job training for students, who would participate in developing software for the company.

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