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08:35 AM RTR NETSCAPE Q4 SHR $0.04 EXCLUDING AMORTIZATION OF
08:30 AM PRN Netscape Reports Record Revenue of $162 Million for Fourth Quarter Ending O...
Netscape Reports Record Revenue of $162 Million for Fourth Quarter Ending October 31, 1998
November 24, 1998 08:30 AM
MOUNTAIN VIEW, Calif., Nov. 24 /PRNewswire/ -- Netscape Communications Corporation NSCP today reported record company revenue of $162.0 million for the quarter ended October 31, 1998, an eight percent increase over the $150.2 million in revenue during the quarter ended July 31, 1998. The company reported operating income of $0.9 million for the quarter ended October 31,1998, as compared to an operating loss of $2.1 million for the preceding quarter ended July 31, 1998. Net income for the quarter ended October 31,1998, totaled $2.7 million or $0.03 per share, compared with net income of $0.1 million or $0.00 earnings per share in the preceding quarter. Net income, excluding amortization of goodwill generated from prior acquisitions, totaled $4.2 million or $0.04 per share for the quarter ended October 31, 1998.
Netscape saw strong growth in its Netscape(R) Netcenter portal business, with revenue for Netcenter increasing 24 percent to $48.0 million for the quarter ending October 31, 1998, as compared to $38.7 million for the quarter ended July 31, 1998. Revenue from Netscape's Enterprise software and services business also continued to grow, increasing two percent during the quarter to $114.0 million, compared to $111.6 million in the previous quarter. Netscape's international business also grew, with revenue from international sales increasing to 13 percent of Netscape's overall revenue, as compared to 11 percent of Netscape's overall revenue in the quarter ended July 31, 1998.
"Results for the fourth quarter demonstrate that Netscape's Netcenter and Enterprise software and services businesses continue to attract customers worldwide who want to participate in the Net Economy," said Jim Barksdale, president and chief executive officer of Netscape. "A number of deals in the quarter reflected the strong synergies between the two sides of our business, with customers such as Qwest Communications, Sasktel and others taking advantage of Netscape's unique Internet expertise in both award-winning Enterprise software and leading Internet portal services."
Netcenter Overview
In the quarter, Netscape embarked on an internal campaign called "Project Turbo" to build Netscape Netcenter into one of the fastest growing Internet portal sites. Project Turbo goals were based on metrics in key areas including Web site traffic and reach, member registration, software downloads and revenue growth. Netscape surpassed each of its goals, with specific results including: Reaching up to 32 million daily page views and an average 50 percent increase in daily traffic over the preceding quarter; growing Netscape Netcenter member registration by one million new members per month; and growing registration from six million in the previous quarter to more than nine million during the fourth quarter, representing a quarterly member acquisition increase of 83 percent.
Netscape client software downloads marked another key area of growth. Netscape set a goal to reach more than 12 million downloads during the quarter, and surpassed its goal with more than 24 million Netscape(R) Communicator and Navigator software downloads from Netscape Netcenter. The increase in downloads was in part due to new beta and shipping releases of Netscape's browser products. In October 1998, Netscape shipped Netscape Communicator 4.5, the first browser designed to link Netscape Netcenter portal site's content and services with ease-of-use advances in the browser to make it simpler for people to find information on the Internet.
Netscape also announced several key agreements for Netcenter, including relationships with entertainment and media content providers such as Entertainment Tonight, Rolling Stone Network and Children's Television Workshop for the Netcenter Kids & Family and Entertainment channels; and a strategic agreement with Qwest Communications, Inc. to offer consumers one-stop access to a suite of easy-to-use leading communications services through the Netscape(R) Contact service. In addition, Netscape unveiled SmartDownload, a free service designed to make the software downloading process more productive, and a next-generation portal service called 'Custom Netcenter' that enables organizations to create corporate portals that integrate the services and content of the popular Netscape Netcenter portal with Netscape's enterprise software and with the organization's specific applications and business information. Netscape also announced a major push to extend Netscape Netcenter content and services into local markets worldwide.
Enterprise Overview
On the Enterprise side of its business, Netscape announced several significant agreements. In September 1998, Netscape and Lucent Technologies announced that Lucent had licensed the Netscape(R) CommerceXpert suite of Internet commerce applications to create Lucent ECommerce Solutions, a comprehensive portfolio of consulting services, software and network security products for conducting electronic commerce. Netscape also recently announced strong momentum for its security products, with more than 20 vendors, including Check Point Software Technologies, RedCreek and Litronic, licensing or integrating Netscape's security solutions in their virtual private networks, firewalls, smart cards and other security products.
In addition, Netscape unveiled Netscape Messaging Server 4.0 Hosting Edition to enable Internet service providers and telecommunications companies to deliver hosted Internet services to millions of users. The company announced that more than 75 Internet service providers and telecommunications companies worldwide, including Bell Canada Emergis, Fabrik, France Telecom and others, are deploying hosted Internet and Intranet services based on Netscape's scalable server software. During the fourth fiscal quarter, Netscape also began shipping Netscape(R) Application Builder 3.0 software for speeding development of applications for Netscape(R) Application Server software; Netscape(R) Process Manager 1.0 application software for enabling companies to design, deploy, manage and access sophisticated processes throughout an enterprise and over Extranets; and Netscape(R) Mission Control Desktop 4.5 with the Netscape Communicator Pro management suite, to provide information technology managers with a new level of control and manageability for their Intranet client environments.
Netscape Communications Corporation is a leading provider of software and services for businesses that want to transform the way they create and keep customers in the emerging Net Economy. The company offers a full line of enterprise software solutions, professional services, and a leading Internet portal to help companies build, buy or outsource Internet applications that drive revenue growth, build customer loyalty, and create new levels of business efficiency. Traded on Nasdaq under the symbol "NSCP," Netscape Communications Corporation is based in Mountain View, California.
Additional information on Netscape Communications Corporation is available on the Internet at home.netscape.com, by sending email to info@netscape.com or by calling 650-937-2555 (corporate customers) or 650-937-3777 (individuals).
Netscape, Netscape Navigator, Netscape Certificate Server, Netscape ONE, Netscape SuiteSpot and the Netscape N and Ship's Wheel logos are registered trademarks of Netscape Communications Corporation in the United States and other countries. Other Netscape logos, product names and service names are also trademarks of Netscape Communications Corporation, which may be registered in other countries. Other product and brand names are trademarks of their respective owners.
NETSCAPE COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, 1997 October 31, 1998
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $55,172 $85,885
Short-term investments 129,426 91,598
Accounts receivable, net 153,191 164,892
Deferred tax assets 37,336 39,770
Other current assets 19,961 24,535
Total current assets 395,086 406,680
Property and equipment, net 131,093 144,886
Long-term investments 76,698 89,169
Other assets 29,943 26,099
$632,820 $666,834
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $40,081 $50,214
Accrued compensation and related
liabilities 23,193 26,977
Other accrued liabilities 34,106 35,980
Deferred revenues 106,170 148,582
Total current liabilities 203,550 261,753
Long-term obligations 215 420
Stockholders' equity:
Common stock and additional paid-in
capital 549,196 576,937
Deferred compensation (3,671) (1,306)
Accumulated deficit (119,201) (170,618)
Accumulated other comprehensive
income (loss) 2,731 (352)
Total stockholders' equity 429,055 404,661
$632,820 $666,834
NETSCAPE COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Three Months Ended Year Ended Ten Months Ended
September 30, October 31, December 31, October 31,
1997* 1998 1997* 1998*
Revenues:
Product revenues $108,822 $88,225 $383,950 $261,457
Service revenues 43,246 73,800 149,901 186,352
Total revenues 152,068 162,025 533,851 447,809
Cost of revenues:
Cost of product
revenues 10,362 7,532 36,579 27,313
Cost of service
revenues 20,645 33,130 77,118 90,717
Total cost of
revenues 31,007 40,662 113,697 118,030
Gross profit 121,061 121,363 420,154 329,779
Operating expenses:
Research and
development 32,734 37,111 132,808 123,238
Sales and marketing 62,588 70,148 237,321 213,004
General and
administrative 11,272 11,717 50,357 42,715
Purchased in-process
research and
development and
merger related
charges -- -- 108,935 --
Restructuring
charges -- -- 23,000 12,000
Goodwill
amortization -- 1,526 -- 5,088
Total operating
expenses 106,594 120,502 552,421 396,045
Operating income
(loss) 14,467 861 (132,267) (66,266)
Interest income, net 1,235 2,322 9,062 6,873
Other income
(expense), net -- (510) 1,860 7,976
Equity in net losses
of joint ventures -- -- (5,939) --
Income (loss) before
income taxes 15,702 2,673 (127,284) (51,417)
Provision (benefit)
for income taxes 5,479 -- (11,788) --
Net income (loss) $10,223 $2,673 $(115,496) $(51,417)
Basic income (loss)
per share $0.12 $0.03 $(1.34) $(0.54)
Diluted income (loss)
per share $0.10 $0.03 $(1.34) $(0.54)
Shares used in
computing basic
income (loss)
per share 88,018 97,892 86,058 95,993
Shares used in
computing diluted
income (loss)
per share 99,156 103,726 86,058 95,993
* Certain prior period amounts have been reclassified to conform with the current period presentation.
Excluding non-recurring purchased in-process research and development, merger, and restructuring charges, net of tax effect:
Net income (loss) $10,223 $4,199 $4,651 $(34,329)
Basic income (loss)
per share $0.12 $0.04 $0.05 $(0.36)
Diluted income
(loss) per share $0.10 $0.04 $0.05 $(0.36)
Shares used in
computing basic
income (loss)
per share 88,018 97,892 86,058 95,993
Shares used in
computing diluted
income (loss)
per share 99,156 103,726 89,568 95,993
NETSCAPE COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Three Months Ended July 31, 1998
Enterprise Netcenter Other Combined
Revenues:
Product revenues $92,293 $-- $-- $92,293
Service revenues 19,291 38,650 -- 57,941
Total revenues 111,584 38,650 -- 150,234
Cost of revenues:
Cost of product revenues 10,499 -- -- 10,499
Cost of service revenues 19,316 6,122 -- 25,438
Total cost of revenues 29,815 6,122 -- 35,937
Gross profit 81,769 32,528 -- 114,297
Operating expenses:
Research and development 25,046 12,748 -- 37,794
Sales and marketing 48,270 16,163 -- 64,433
General and administrative 8,796 3,816 -- 12,612
Goodwill amortization -- -- 1,526 1,526
Total operating expenses 82,112 32,727 1,526 116,365
Operating income (loss) (343) (199) (1,526) (2,068)
Interest income, net -- -- 2,140 2,140
Other income, net -- -- 16 16
Income (loss) before
income taxes (343) (199) 630 88
Provision for income taxes -- -- -- --
Net income (loss) $(343) $(199) $630 $88
Three Months Ended October 31, 1998
Enterprise Netcenter Other Combined
Revenues:
Product revenues $88,225 $-- $-- $88,225
Service revenues 25,799 48,001 -- 73,800
Total revenues 114,024 48,001 -- 162,025
Cost of revenues:
Cost of product revenues 7,532 -- -- 7,532
Cost of service revenues 24,742 8,388 -- 33,130
Total cost of revenues 32,274 8,388 -- 40,662
Gross profit 81,750 39,613 -- 121,363
Operating expenses:
Research and development 25,147 11,964 -- 37,111
Sales and marketing 48,694 21,454 -- 70,148
General and administrative 8,157 3,560 -- 11,717
Goodwill amortization -- -- 1,526 1,526
Total operating expenses 81,998 36,978 1,526 120,502
Operating income (loss) (248) 2,635 (1,526) 861
Interest income, net -- -- 2,322 2,322
Other income, net -- -- (510) (510)
Income (loss) before
income taxes (248) 2,635 286 2,673
Provision for income taxes -- -- -- --
Net income (loss) ($248) $2,635 $286 $2,673
SOURCE Netscape Communications Corporation
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