Digital Equipment Corporation's subsidiary, Alta Vista Internet Software Inc., will be spun off through an initial public offering (IPO). Alta Vista sells a number of software products and services designed for the Internet and intranet markets, but is mostly known for its Alta Vista Internet Search Service on the World Wide Web.
Digital said that it has not determined the final size or the price of the offering, but did say that, after the IPO, Digital will still hold 80 percent of Alta Vista stock. The offering could be as high as $50 million of class A common shares. Digital will retain ownership of all Class B shares, which will have the majority of voting rights in the new company.
Digital will be taking advantage of a hot market for Internet search engines, following the successful IPO's of Infoseek, Lycos, and Exite earlier in the year.
Infoseek came out with a 3.5 million share offering at $12 per share in June. Infoseek had reported losses in every quarter, and sales in all of 1995 were $1,032,000, with sales in the first three months of 1996 of $1.5 million. At its offering price, the market value of the company based on a $12 per share value, and 25,226,897 outstanding shares, was over $300 million. Recently the share price for Infoseek has dropped by half, but still it maintains a huge market value in relation to its profitability or revenue.
Scott Kincade, publisher of New Tech Market Newsletter, said, "The Alta Vista search engine is the hottest Internet search engine around. Digital could not have picked a better time, as far as the reputation of Alta Vista is concerned, to try this. It is true that the market has turned a little skeptical, but this should be a widely sought IPO."
Lehman Brothers, Cowen & Co and J.P. Morgan & Co will manage the offering, and copies of the prospectus for the offering, when available, may be obtained from Lehman Brothers' prospectus department.
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