Netscape earnings to show how well strategy working
Reuters Story - August 17, 1998 19:41
By Andrea Orr
PALO ALTO, Calif., Aug 17 (Reuters) - Netscape
Communications Corp. releases third-quarter earnings
on Tuesday in a much-anticipated report that could reassure
investors that the company has two lives.
The company's first life, as an Internet browser provider,
was cut short when Microsoft Corp. entered the browser
market. While Netscape has credited itself with quickly
bouncing back from that assault and redefining its whole
business, questions remain over whether it has restored itself
to its former glory as a top Internet company.
"I think this is a pivotal quarter," Volpe Brown Whelan
analyst Andrea Williams said. "They've relaunched their
enterprise software and their Netcenter strategies. Here's our
chance to see how well they're doing."
Enterprise software and the Netcenter Web site are the two
businesses Netscape has aggressively built up this year to
replace lost browser business.
The software business is focused on providing companies the
tools they need to communicate and complete transactions
online. Netcenter is an Internet gateway, or "portal" that
competes with popular services like Yahoo! and Excite.
Although Netscape still controls more than half of the
browser market, it no longer makes any money from that business
-- early this year it started giving its browsers away for free
in an attempt to better compete with Microsoft.
Netscape has made two quarterly earnings reports since
then, but analysts say the third quarter will be its first
"pure" report to provide a good view of its operations,
unobstructed by restructuring costs.
And they are holding the company up to the same high
standards Wall Street has come to expect of Internet companies.
While the consensus estimate for Netscape's third quarter
is for a loss of 2 cents per share, some analysts said it would
be a disappointment if Netscape were just to meet, rather than
surpass that number.
Even though many of the biggest Internet companies are
still losing money, they have typically shown losses that were
smaller than Wall Streets forecasts, along with sales and
traffic to their Web sites that exceeded expectations.
In the prior fiscal year's third quarter, which ended Sept.
30, Netscape reported net income of $11.7 million, or 13 cents
a share, on revenues of $150 million. Netscape has since
changed its fiscal year to end in October.
Salomon Smith Barney analyst Mark Usem said he is also
interested in seeing how Netscape's revenues break down between
enterprise software and Netcenter.
"I think it's probably going to show more Web site revenues
than in the past, that that's OK as long as the software
business is showing good growth," he said. |
