Don't know how this will drive the stock tomorrow, but the overall tone is excellent.
Fez
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America Online Announces 850 Layoffs
(03/31/99, 7:46 p.m. ET)
By Malcolm Maclachlan, TechWeb
America Online's attempt to digest Netscape meant pink slips for approximately 850 employees who were laid off Wednesday.
The layoffs were split evenly between the two companies, according to AOL. It had been rumored for weeks that AOL was going to lay off up to 1,000 employees between the companies.
AOL has hired the career-transition company Drake Beam Morin to help former employees find new jobs. The company is now addressing job descriptions, salaries, and titles of remaining Netscape employees who will be offered positions within AOL.
Meanwhile, AOL is also working to address other aspects of the acquisition. Chief among these is Netscape's search-and-directory deal with Excite. The companies are in talks to either renegotiate the deal or throw it out altogether, company officials said.
Excite and Netscape signed the deal last May. It was generally welcomed by investors, who saw it as a bid for Netscape to finally become a major consumer portal.
Under the terms of the contract, Netscape licenses search services and other content from Excite. Excite, in turn, agreed to pay Netscape $70 million over two years in shared advertising from placement on Netscape's browser and Web portal.
However, the deal included escape clauses for both parties. With its ownership of both Netscape's Netcenter and its own online properties, AOL now has a major presence in both the workplace and consumer portal markets, respectively. Analyst have also predicted that Excite would want to go its own way, since AtHome said in January that it would buy the company for $6.7 billion.
Sun's role within the Netscape deal has become more clear as well. AOL and Sun addressed the details of their alliance at a press conference in New York on Tuesday. The two are forming a combined software division to market enterprise software from both Sun and Netscape.
The business unit, which is now known as the Sun-Netscape Alliance, will function semi-independently. It will have 2,000 employees, mostly located on the Silicon Valley campuses of Sun and Netscape, which are located in Santa Clara and Mountain View, Calif., respectively.
According to many analyst, the unit stands to be a major force in the enterprise arena.
"This combination will make Sun/AOL very serious players in the Web server business and put the duo on a very short list of full-range players that includes IBM, HP, and the Microsoft/Compaq alliance," said analyst Martin Marshall of Zona Research.
It is also likely to stake out an independent identity. The companies have said the Sun-Netscape will be replaced. The president and general manager of the unit, Mark Tolliver, said that the it will operate like an independent company. Tolliver presently serves as president of Sun's consumer and embedded division
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