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

To: ahhaha who wrote (4278)	9/30/1998 11:21:00 PM
From: Crusader	Read Replies (2) \| Respond to of 4903

It's glad to see this thread come back to life, and I appreciate both long and short opinions. My contribution is from CMPnet. The link is below, and I pasted the entire text if you don't want to hyper on over. Crusader techweb.com Netscape: Internet Play? Tuesday, September 29, 1998 Netscape [NSCP] has been battered along with other high-tech stocks in the recent market correction. After closing above 41 on July 2, Netscape's shares have fallen steadily, reaching the low 20s last week. Should you invest in the company at this price? Schaff's Bio Taking Stock Archives Model P Archives To answer that question, you need to figure out whether Netscape is an Internet technologies and services company, or an enterprise software company. Given the company's low stock price, Wall Street has clearly focused on Netscape's slow-growing enterprise software business. As usual, I believe the Street is behind the curve. Before you start sending me disparaging E-mail (I get at least 10 a day), let me explain. Enterprise software sales represent 74% of Netscape's revenue. This side of the business actually seems to be on the verge of a turnaround because of the burgeoning demand for E-commerce tools. The average price of Netscape's enterprise product deals in the latest quarter was $500,000, and almost half were worth more than $1 million. But Netscape will continue to face fierce competition from Microsoft and IBM in this sector, and enterprise software sales will continue to grow more slowly than the company's Internet technologies and services business. -------------------------------------------------------------------------------- "Netscape's future may be in the broad arena of corporate communications management." -- Bill Schaff -------------------------------------------------------------------------------- Netscape recently signed a three-year strategic alliance with Qwest Communications to offer customers data and voice communications through a new single-source service. Netscape Contact is available through Netcenter, the company's Internet "portal." Users will be able to access a personal online address book, and will get a unified in-box for receiving E-mail, faxes, pages, and voice mail. They can also sign up for local, long-distance, and online communications services. The future demand for these combined services for corporate customers, assuming they are competitively priced, looks strong. Netscape's future may be in the broad arena of corporate communications management. Netcenter has become a key growth engine for Netscape since its launch last year. The site has signed up more than 7 million members and is adding 500,000 more a month. In comparison, America Online has more than 13 million members. Netcenter has become an Internet destination similar to AOL and Yahoo. In Netscape's fiscal third quarter, revenue from Netcenter was $38.7 million, a 24% increase on the previous quarter and 32% above the third quarter a year ago. It now makes up about 26% of Netscape's total revenue and 67% of service revenue, which includes income from advertising, consulting, support, and training. In addition, there's talk that Netscape will soon announce a major deal with a large media company. Netscape's management team reads like a Who's Who of technology: Marc Andreessen is executive VP, and James Barksdale is CEO. In addition, the company hired Barry Ariko, formerly a senior executive at Oracle, to be chief operating officer. It still remains to be seen whether all this brain power can turn Netscape into the leading Internet portal company. For the quarter ended July 31, the company reported $150 million in revenue, an increase of 18% year over year. Product revenue was $92 million, and services revenue was $58 million. Gross margins declined dramatically to 76% last quarter because of a change in accounting methods (all technical support, training, and professional services costs will now be included in cost of goods sold). Operating margin improved to -1.4% from the previous quarter's -5.3%. Wall Street expects Netscape to lose 60 cents per share in fiscal 1998 and make a profit of 37 cents per share in 1999. My projection for fiscal 1999 revenue is about $740 million, with net margins rising to about 6%. I've got a 12-month price target of $30, which makes Netscape the cheapest play on Internet portal companies.

To: ahhaha who wrote (4278)	10/1/1998 12:42:00 AM
From: ahhaha	Read Replies (3) \| Respond to of 4903

So how do you get the Netscape-LINUX Net OS launched? 1, we need a name. say, Netux 2. we need a product 3. we need a market 4. we need an introduction of the product to the market I'll start with 4. The way to launch Netux is through the gradual process of public interactive participation. You have the public comment on each phase of the roll-out. I don't mean in the bogus way MSFT used over the years that generated crashing bloatware designed to be all things to all people and I don't mean the company requests public input on what is wanted. That's all well known. I mean to let the public see how the product is evolving through Netcenter and chat or discuss it through expanded facilities at Netcenter. The evolution is going to take time because of the complexities involved. It took MSFT seven years to do original development. We want completed product formal launch in two. The first version of Netux need not be perfection; it only needs to be stable, pull from the net, and store to disk. Peripheral support can be extended in version 2. The public presentation is critical because through graphics and other techniques how the product works and how to work it can be well known before launch. It is also important to keep share by amplifying the value of a stable new OS. It is important to leverage existing technologies that will come into ubiquity by time of launch like cable modem or other products of the many of the company's existing partners. Such leverage can be achieved by using dynamic video where cable is available, for example. The Netcenter presentation parallels the developments at the skunkworks. Thus we need a multidimensional advertising campaign to keep the faithfuls and grow the new interest. The core point is parallel reality: what is actually being created and what is represented to the public. This is a combination of selling and learning. People buy what they know and buy again what is reliable. Maybe it should be called "parallel branding". Hope some of you can add to these feeble efforts. Remember, it is your Netux and we better damn well get it right.

To: ahhaha who wrote (4278)	10/1/1998 9:19:00 AM
From: Jacques Tootight	Read Replies (1) \| Respond to of 4903

Everyone that puts "Cheers" at the end of their posts really mean "jeers". You portend to know what I mean when I sign my posts? Your posts would be much more entertaining without the weak attempts at insult. As far as damage control Peter Lynch or Graham and Dodd are concerned, you'll never make it in this business following garbage like that. There is a pretty long list of successful investors who built fortunes following garbage like that. I'll let you argue the merits of value investing with them. The point is to develop the concept or find weaknesses in it. The weakness in your concept is that there is no reality in it. Not today, not that I can find. I asked that you point us to something from the company that shared your vision. All we get are posts essentially berating us for not being able to see the vision. Look, I'm all for some of the things you'd like to see happen, but I don't make my bets on what I hope will happen. The investment in RedHat opens up some interesting possibilities, but at this point that's all they are. What we know today is that Netscape is primarily a software/e-commerce company that also has an internet portal with great potential. The company has given no guidance that they are doing anything but concentrating on those enterprises. With that information quantified I can make a choice as to how to play. That's why I trade the stock. When Barksdale decides to make a speech or share a business plan about "Netscape's Vision for the Next Millenium" then I'll consider a major long term investment if I think the plan viable. This will all be changing and NSCP's interactive part will be pivotal. Well that's certainly a nice dream and I can only hope that it comes true. The potential is certainly there for them to be there, but thus far they have been a classic underachiever. They are also positioning themselves as a continuing David against two Goliaths. Cheers - RC