Very positive article here from the Wall St Journal. [CNBC positive too]. People better cover those shorts. This stock is going way up, if not today then very soon!
Netscape Posts Profit, Beats Expectations
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By Kara Swisher
Staff Reporter of the The Wall Street Journal
Netscape Communications Corp., the struggling Internet software pioneer,
impressed wary Wall Street analysts by posting a tiny profit in its second
quarter and posting better-than-expected revenue.
The Mountain View, Calif., company had been expected to report a loss of
about 10 cents a share on sales of $115 million to $120 million for the fiscal
period ended April 30. Instead, Netscape earned $8,000, in part because
it recorded an $8.3 million one-time gain on securities transactions. On an
operating basis, Netscape had a loss of $10.1 million, or eight cents a
share. The company's revenue rose to $127.2 million from $125.3 million
in quarter ended in December.
Comparisons with the year-earlier period aren't meaningful because
Netscape recently changed from a calendar year to a new fiscal year that
runs November through October. Because of the change, which the
company said it made to be on the same purchasing cycles as corporate
customers, Netscape reported the single month of January as a "stub"
period that took the place of its first quarter. In that month, Netscape had a
loss of $54.2 million, or 58 cents a diluted share, on revenue of $8.3
million.
Despite the complex financial picture, some analysts were reassured by
what they viewed as signs that Netscape's business isn't eroding
precipitously in the wake of a fierce assault by Microsoft Corp. on its
original business of World Wide Web browser software.
"This is an upside to what we expected," said David Readerman of
NationsBanc Montgomery Securities. "It's the kind of results we wanted to
see from them."
Netscape issued its results after stock markets closed. Its shares had
drifted downward in recent sessions, in part because of concerns that its
quarterly results might be weaker than expected. The company's shares
closed at $23.875 a share on the Nasdaq Stock Market, down $1, but
rebounded to $24.25 in after-hours trading after the announcement.
Netscape built its business on selling browser programs to navigate the
Web. But its meteoric rise attracted the attention of Microsoft, which
counterattacked vigorously in late 1995 by giving away free software.
Microsoft's marketing crusade against Netscape is the crux of the current
antitrust litigation filed against Microsoft by the Justice Department and 20
state attorneys general.
In response to competitive pressures, Netscape began giving away its
browser software earlier this year, a move that reduced its revenue from
that business to zero. The company laid off more than 400 employees,
began emphasizing sales of software to large corporate enterprises and
bolstering its popular Web site, dubbed Netcenter, into a major "portal," or
central hub, for a wide range of services on the Internet. The restructuring
charges that resulted helped produce a loss of $82.3 million in the quarter
ended in December. The interim reporting period for the month of January
also included a $12 million restructuring charge, the company said
yesterday.
Amid all the changes, analysts were particularly interested in the company's
revenue as a proxy for the health of its remaining businesses. Netscape said
enterprise software and services accounted for $96.1 million of the revenue
for the three months ended April 30, compared with $91.4 million for the
three months ending Dec. 31. Revenue from Netcenter was $31.1 million
for the April 30 three months, compared with $21.3 million for the Dec. 31
three months.
In the current quarter, Netscape executives said that it anticipated revenue
would rise to about $140 million. That increase is expected to include the
first partial payments from Excite Inc., an Internet guide that recently
agreed to pay Netscape $70 million as part of a two-year partnership.
Analysts said they were pleased with the mix of results in the current
quarter, showing Netscape's focus on its new businesses. "They're back
with a solid quarter and a lot of positive signs for the months ahead," said
Daniel Rimer of Hambrecht & Quist in San Francisco. "These guys keep
getting up . . . and now it's the fourth round and they are fighting back
again."
Though it now gives its browser away, the product is still important to
Netscape's image among corporate customers and its influence in setting
technical standards. Netscape executives yesterday asserted that it
maintains a share of about 60% in that market, though the Justice
Department has said it believes Microsoft's browser has a market share of
50% or more.
Jim Barksdale, Netscape's chief executive officer, said the numbers suggest
that Netscape's new strategy is "resonating" in the marketplace and that the
company is executing well against it. "I think we are building momemtum
and building steam," Mr. Barksdale said.
Separately, Netscape will announce today a deal with CNET Inc., in which
the San Francisco-based Internet media company will program a
computer-related section on the Netcenter site. CNET will provide
technology news, information, software and reviews in return for traffic that
will be aimed at CNET's many other computing-oriented sites. Netscape
said it will sell its own advertising in the area.
Journal Link: Join an on-line discussion about Netscape and the future of
browser development in The Wall Street Journal Interactive Edition at
wsj.com |
