AltaVista is laying off 200 people - a quarter of its staff - because of weak advertising sales.
The company claims that online-advertising sales have been slow, blaming an industry-wide decline in ads sales over the last twelve months.
AltaVista laid off an additional 25 per cent of its staff last September as it tried to "streamline" in an effort to return to profitability. BBC News Online said the company has also been suffering from the loss of several key management personnel.
The slump in Internet stocks also caused AltaVista to abandon its plans "for an initial public offering that the company had hoped would raise up to $300 million", the report says. The company has delayed its IPO three times since 1996.
AltaVista now has 600 staff worldwide.