Yup... here's the news release. I hope I'm Safe....<HR>
Netscape To Announce Big Layoffs
By Spencer E. Ante
Staff Reporter
3/18/99 9:55 PM ET
The America Online (AOL:NYSE)-Netscape Communications
(NSCP:Nasdaq) get-together might begin with a goodbye.
In what could turn out to be the Internet economy's biggest
instance of downsizing, sources close to Netscape say the
pioneering company is close to laying off as much as 30% of its
workforce. The layoffs could take place as soon as next week,
say observers close to the company.
The cutback in Netscape's workforce is part of the move by AOL
to integrate Netscape into its operations, creating one giant
Internet media conglomerate. On Wednesday, Netscape
shareholders voted to approve AOL's acquisition of the Mountain
View, Calif.-based company. When the merger was announced
last November, the deal was valued at $4.2 billion but it is now
worth nearly $9 billion. In that period, AOL's share price has
more than doubled and its stock split 2-for-1 last month.
Netscape's stock has also surged on the deal, increasing 145%
since it was announced.
Founded in April 1994 by James H. Clark and Marc Andreessen,
Netscape is arguably the granddaddy of the Internet craze. The
founders helped create the NCSA Mosaic software that was
further developed into the Netscape Navigator Web browser.
Netscape briefly threatened to dethrone Microsoft
(MSFT:Nasdaq) after staging a high-profile and successful IPO in
August 1995, only 16 months after its founding.
Netscape has approximately 2,500 employees scattered
throughout 17 countries, but the majority of them work at the
Mountain View headquarters. About 700 employees could be
shed from the company. However, one source close to the
company says some employees may be rehired in new positions
as the merged behemoth hatches new initiatives in e-commerce
and extends its portal strategy.
A Netscape official deflected questions about the layoffs. "That's
premature at this point," says Patty Pierson, a Netscape
spokeswoman. "I'm not really in a position to comment on
rumors."
AOL spokesman Jim Whitney would only say: "We'll have more
information next week about how the two companies are going to
operate going forward."
"Nobody knows exactly what's going to happen," says one
observer close to the company. "Management is sending out a
lot of mixed messages. That's the reason there's something to
this."
Initially, one of AOL's biggest fears about the merger was that
Netscape employees -- especially the company's highly valued
engineers -- would run for the exits when the merger went
through. To stave off such an exodus, AOL offered an extra
month's salary to every Netscape employee who remained until
the deal closed.
Observers familiar with the negotiations say Netscape engineers
are the least likely to be affected by the layoffs. "The word down
here is 'do not fire the engineers,'" says a source close to the
company. "If you're an engineer and you're at Netscape, you're
not going to go anywhere. AOL is starved for engineers." |
