To: Glenn D. Rudolph who wrote (4772 ) 2/10/1999 6:22:00 AM From: Thai Chung Read Replies (1) | Respond to of 41369
AOL-Netscape deal draws a billion from Sun By Tim Clark and Stephen Shankland Staff Writers, CNET News.com February 9, 1999, 11:00 p.m. PT update America Online stands to net $1.25 billion from Sun Microsystems over the next three years by result of a deal allowing Sun to sell Netscape software on behalf of the Internet giant. Under the complex agreement that comprised AOL's buyout of Netscape, Sun has guaranteed that AOL will earn $975 million in sales royalties on Netscape software. Sun also will pay AOL $275 million for licensing rights, bringing Sun's three-year financial commitment to AOL to a total of $1.25 billion, according to Sun's regulatory filing on the transaction, made today. Further, Sun will pay AOL $10 million a year in cooperative marketing fees. On the other end of the deal, due to close this spring, AOL will buy $500 million in Sun hardware and services, pay Sun $5 million per month to license Sun's Java software, and pay $1 million a month for technical support of Netscape software. Total payments to Sun will thus reach $596 million over three years. In effect Sun is underwriting a significant portion of the $4.2 billion Netscape buyout in return for a guarantee of $500 million in sales of hardware and services to AOL, where Sun had not previously been strongly represented. The world's largest ISP and most popular Web destination is still growing quickly, today announcing it added another million members (to reach 16 million) in a little over five weeks. A Sun spokesman confirmed the filing is correct. Representatives of AOL and Netscape could not be reached for comment.