14 November 2002 Search software specialist Verity is to acquire ailing Inktomi’s enterprise search technology division for $25 million (€24.8m) in cash.

Verity wants Inktomi’s technology – including basic search, categorization and content formatting software, as well as XML search toolkits – to extend the capability of its software that customers run on their corporate intranets and ecommerce sites. Verity’s software is also deployed in more than 250 different ebusiness applications via a number of OEM agreements.

The company said that Inktomi’s technology will fill a mid-market hole in Verity’s information retrieval product suite, as well as give it access to a customer base of about 2,500 companies. Verity is expected to take-on about 40 of the 100 employees from Inktomi’s search business division.

However, Inktomi has sold its enterprise search business for a tiny fraction of the $334.7 million (€331.5m) it paid Ultraseek for it in 2000.

The deal is also the latest stage in Inktomi’s dismantling of its ambitious growth strategy formulated during the late 1990s. The company tried in vain to expand into several different markets, including network caching, content distribution and media broadcasting. Inktomi will now focus on its core web search and paid inclusion services, where it catalogues customers’ web site content on popular online search engines.

But Inktomi executives face an uphill struggle to turn the once high-flying company around in the face of free-falling revenues. Sales slumped 48% to $20.4 million (€20.2m) in the quarter to the end of September, compared to the same period a year earlier.

In addition, the company is rapidly burning through its cash reserves. Inktomi ended its fourth quarter in September with just $45.4 million (€45m) in cash, compared to $213.5 million (€211.4m) in the fourth quarter of 2001.