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AltaVista Lays Off 225 Employees

September 17, 2000

PALO ALTO, Calif. (AP) _ AltaVista is laying off a quarter of its workforce and giving up its fight to be a top Internet media site to refocus on its search engine.

The layoffs, among the largest in the Internet industry this year, will be the second round for the Palo Alto-based company. It laid off 40 employees in May. The new layoffs, announced Friday, will affect primarily employees who oversee news and message boards.

AltaVista had tried to transform itself over the past two years from a search engine into an Internet portal, spending hundreds of millions of dollars to add chat rooms, shopping and a finance site.

But industry analysts say that wasn’t enough.

``They failed to respond with the necessary attack instinct when it became clear in 1997 that search would not be enough to drive portal traffic,″ said Whit Andrews, an Internet industry analyst for Gartner Group Inc., a market research company in Stamford, Conn.

AltaVista Chief Executive Officer Rod Schrock said the Internet portal model is difficult to achieve.

``The wisdom was that search engines would evolve into media companies, and Yahoo has been the only one to successfully do that,″ he said.

The company has beefed up its search engine for MP3 music, photographs and video and has added RagingSearch, which downloads more quickly. The increased focus on its search engine is expected to put the company in greater competition with Google, based in Menlo Park, and Inktomi, in Foster City.

AltaVista, which delayed its initial public offering five months ago because of a volatile stock market, plans to become profitable by Jan. 31, Schrock said. He said AltaVista’s focus on its search engine will help the company reach that goal.

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On the Net:

AltaVista: www.altavista.com

Yahoo: www.yahoo.com

Google: www.google.com

Inktomi: www.inktomi.com

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