SAN FRANCISCO – Internet search pioneer AltaVista Co. on Tuesday announced another shake-up in its struggle to survive, with the hiring of a new CEO and a 30 percent cut in its rapidly dwindling work force.
James Barnett, an executive with experience in the dot-com and software industries, is taking over at AltaVista nearly a year after its previous CEO, Rod Schrock, resigned just as the Internet economy began to collapse.
Reflecting the grim prospects facing AltaVista and other fallen Internet stars, Barnett's tenure begins with a purge of about 160 of the Palo Alto-based company's 500 employees.
The cutbacks mostly will hit workers in AltaVista's failed online shopping comparison service. The shopping service's Irvine office will close in the reorganization
It marks AltaVista's third mass layoff in the past year. AltaVista's payroll peaked at about 950 workers last summer.
Barnett, 43, most recently worked as president of San Francisco-based MyFamily.com, one of the few online companies that has been able to build a significant subscription business on the Web.
AltaVista's owner, Andover, Mass-based venture capitalist CMGI Inc., also is a major investor in MyFamily.com.
In an interview Tuesday, Barnett said he believes the latest job cuts should be enough to enable AltaVista to stay in business until it starts to make money. He declined to predict when AltaVista would turn a profit, but said the company's financial results will improve significantly in the fiscal quarter beginning Nov. 1.
Although AltaVista is privately held, CMGI is publicly traded and provides a snapshot of the search engine company's finances in Securities and Exchange Commission filings.
Through nine months ended April 30, CMGI's search and portals division -- a segment consisting mostly of AltaVista -- lost $1.65 billion, up from a loss of $819 million in the prior year. The results include special charges taken to account for restructuring and bad investments.
CMGI's revenue from its search and portals division fell 10 percent to $152.7 million during the nine months.
CMGI is scheduled next week to report its results for the entire fiscal year.
AltaVista's smaller work force is an offshoot of AltaVista's shrinking aspirations.
After CMGI paid $2.9 billion for an 81.5 percent stake in AltaVista in 1999, the company embarked on a shopping spree designed to turn the search site into a multipurpose destination in the mold of Yahoo.
As part of the expansion, AltaVista paid $163 million for Raging Bull, an investment site, and launched several other services, including e-mail and online shopping comparison.
The strategy helped make AltaVista one of the Web's 10 most trafficked sites in early 2000, but saddled the company with huge losses that became a crippling liability when the Internet bubble burst.
Investors' disdain for unprofitable dot-coms prompted AltaVista in January to scrap an initial public offering of stock that sought to raise as much as $300 million.
After deciding to refocus its attention on search services, AltaVista sustained a $95.9 million loss on the sale of its Raging Bull site in January. The company is trying to make money by licensing its search engine to other businesses and selling the top spots in the search results on its site to the highest bidders.
Meanwhile, AltaVista is losing popularity among Web surfers. Although Barrett disputes the findings, online research firm Jupiter Media Metrix estimated AltaVista's audience at 6.9 million unique users in August, making it the Web's 50th most popular site.