This is from thestreet.com. I think that once people start focusing on the future this stock will go way up.
Top Stories: Netscape Beats the Street,
but Questions Remain
By Eric Moskowitz
Staff Reporter
5/26/98 8:19 PM ET
What's going on with Netscape (NSCP:Nasdaq)?
Yes, it did report better-than-expected earnings Tuesday
night, beating First Call estimates by 10 cents. Of course,
the company didn't include the month of January in its
financial sheet thanks to a shift in its fiscal year, but that's
okay. And according to the company's own press release, it
actually lost 98 cents a share in last year's second quarter,
so this latest earnings number (zero cents a share) was a
quantum leap better.
Confusing, isn't it? It's understandable when an investor (or
reporter) can't make sense of Netscape's financial doings.
But an analyst?
David Keil, an enterprise software analyst with
Robinson-Humphery, says he couldn't put up with all of
Netscape's financial maneuverings and dropped coverage of
the stock a month ago. "They flipped around their fiscal
year, making it really hard to cover the company," says Keil,
who had a market perform rating on the stock. (His firm
didn't participate in any of Netscape's public offerings.)
Netscape moved up its fiscal year from Oct. 1 to Nov. 1, and
reported the month of January separately.
Its January numbers weren't good: Netscape lost 58 cents a
share on revenues of $8.32 million. "There wasn't that much
business done in January," admitted Peter Currie,
Netscape's chief financial officer, during the conference call.
"We reduced our workforce, restructured our operations and
changed our channel strategy -- we did an enormous amount
of heavy lifting that month." The company announced in the
middle of January that it was releasing its browser for free.
Netscape CEO James Barksdale also said that the
company maintained its 60% share of the browser market, a
key for Netscape going forward because it will determine
how much it can charge advertisers and partners to be on its
main Netcenter page.
Also on the plus side, Netscape is selling software products
to more affluent customers and garnering better revenues
from its Netcenter "portal" site. Netscape, which finally
entered the portal wars earlier this year, reported a 42%
increase in Netcenter revenues over its December quarter
(from $21 million to $31 million). The Netscape Web site had
25 million hits in March, noted Barksdale, second overall
behind Yahoo! (YHOO:Nasdaq). Netscape also just
completed a multimillion dollar deal with Citibank
(CCI:NYSE) -- its biggest ever -- to help build up the bank's
online franchise. The size of the pact was not disclosed
during Tuesday night's conference call. Questions about the
company's financial sheet outweighed its new -- and so far
more profitable -- emphasis on enterprise software sales and
its Netcenter portal.
"Confusion is definitely the right word; this quarter is just one
huge headache," says Andrea Williams, an analyst with
Volpe Brown Whelan. "There just are no apples-to-apples
comparisons so you can't put this quarter into perspective."
Williams, who rates the stock a neutral, means that it's
difficult to compare a February through April quarter with a
1997's January to March quarter.
Williams also pointed out that she was concerned about the
January earnings numbers, specifically a $12 million
restructuring charge. "I'm not sure what that is," says
Williams, whose firm hasn't participated in any of Netscape's
public offerings. When reporters questioned Barksdale and
Currie about the irregular earnings numbers, Currie
responded that these details will be addressed at the
company's analyst presentation June 4.
TSC knows of at least one analyst who won't be attending.
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