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Technology Stocks : Netscape -- Giant Killer or Flash in the Pan? -- Ignore unavailable to you. Want to Upgrade?

To: P.M.Freedman who wrote (3282)	5/26/1998 8:47:00 PM
From: Xpiderman	Read Replies (2) \| Respond to of 4903

More comments from Briefing.Com: Netscape Communications (NSCP) --UPDATE--: One last item on Netscape -- First Call apparently had an estimate of -$0.29 for January, excluding charges, though we have unable to confirm this figure. Assuming that it is correct, however, January was roughly a $0.45 loss excluding the $12 mln restructuring charge. As for Feb-Apr, the breakeven figure should arguably exclude an $8 mln sale of securities, in which case NSCP had a loss of about $0.04. Add it all up for Jan-Apr and you get a loss of $0.49 versus expectations for a loss of $0.39, and worst of all, you've got Netscape trying to convince you that they beat by a dime.... Netscape Communications (NSCP) --UPDATE--: Netscape just ran a clinic in how not to report earnings. In what has to be the worst attempt at concealing a lousy quarter in recent memory, NSCP lumped a quarter's worth of losses into a black hole called January, and used the sale of securities to eke out a breakeven figure for the February-April quarter. As our earlier comment noted, Netscape took advantage of a shift in their reporting schedule to dump losses into January. In the conference call, Chief Administrative Officer Peter Currie ducked questions about January three times. He at first said that January was slow because it was the beginning of the quarter, then later said that "we just didn't get much done" because people were worried about layoffs. If you're going to play games with the numbers, at least be ready for the questions. Even after dumping a $0.58 per share loss into January, Netscape still couldn't post a legitimate breakeven number for Feb-Apr. The company reported a $10.1 mln operating loss in Q2, but an $8 mln sale of unnamed securities helped take the final number up to breakeven. The bottom line on Netscape: the company lost $0.58 in Jan-Apr, which included both a $12 mln restructuring charge in January and the $8 mln securities sale in Feb-Apr. Though no per share figure was given excluding these items, it would be in the $0.53 area and would still be far worse than Wall Street expectations of a $0.10 loss. Forget the comparison of -$0.10 with breakeven -- that's a mirage. The first four months of 1998 were lousy for Netscape, and what's worse is that they tried to make the market believe that they were great. Let's hope that the company doesn't believe it's own spin. As for that 1/4 point gain in after-hours, we suspect that it will be a very different story tomorrow. For more on Netscape, check out the Stock Brief later tonight....

To: P.M.Freedman who wrote (3282)	5/27/1998 9:27:00 AM
From: Frank	Respond to of 4903

P.M. I agree with your assessment and the WSJ article about January. In reviewing the numbers I find that my orginal estimate on earnings of .16 per share was about right on target. I made the following adjustments: - Add revenue of: $ 17500 Reflect anualized 70 mil. This yields a diluted income per share of .17 so, I was off by a penny. If one excludes the other income of $ 8325, this gives income of .10. It might be fair to exclude this item as it does not reflect on ongoing operations. Its funny, but most of the people on the thread have not looked at the balance sheet in tandem with the income statement. If they did they could appreciate the rational behind the January, "Stub month." Please note: - Increase of: Cash and eq of +40971 Other items to consider is the change in deferred revenues and accounts payable. Cash flow on balance looks good. It took some time to interpret this goodie, but I feel it does reflect positively on NSCP. One other comment, the 12000 Restructuring is quite appropriate for Jan, IMO. Good luck.