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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: TQR who wrote (7859)	3/24/1999 10:50:00 PM
From: Walcalla	Read Replies (1) \| Respond to of 41369

Sorry if this has already been posted. Wow! Sun will pay AOL ... how much? By John Madden Sun Microsystems will pay America Online Inc. US$100 million a quarter for the next 12 quarters to build on and sell software developed by AOL's newly acquired Netscape Communications, according to outgoing Netscape CEO Jim Barksdale. In an appearance in California on Monday at GartnerGroup's Symposium/Itxpo 99, Barksdale also proclaimed he's effectively retiring from managing and ruled out running another company in the future. "I'm not going to be in active management ever, never again," he said. "I've been in this for (almost) 35 years, that's enough." AOL's quest for Netscape began last November with its US$4.2 billion bid for the five-year-old browser and portal company that became a poster child for the Internet era. In a separate but integral part of the deal, Sun signed on to a three-year marketing and strategic development agreement, under which Sun will help AOL develop and sell electronic-commerce software offerings, using Sun's Java technology. Revelation According to terms released at the time, the deal called for AOL to buy US$500 million worth of Sun's hardware and services through the year 2002, with Sun paying AOL US$350 million in licensing, marketing and advertising fees, plus minimum revenue commitments during the next three years. But Barksdale's revelation values the Sun share of the deal at several times that amount. He said the US$100 million per quarter price could not be revealed until the merger with AOL became final, which it did last Wednesday with a shareholders' vote. Barksdale said the relationship is designed to take advantage of Sun's sales force of 7,000 to appeal to enterprise customers and generate revenue. He said Netscape's sales force is one-tenth of Sun's. He likened the deal to IBM's acquisition ofLotus Development. Selling Lotus products has helped IBM sell hardware and products. "Every six dollars of software sales means one dollar in hardware sales," Barksdale said he's been told by IBM execs. Playing nice Barksdale said the prospect of increased revenues -- not to mention the $100 million per quarter that Sun is paying -- will be incentives for AOL and Sun to make the partnership work. "This is a lock. It forces people to work together and make products and sell them rapidly," he said. Until the merger was approved by federal regulators, Barksdale said the companies were not able to do as much integrated planning in case the merger failed. He said the deal with Sun does not preclude working with current partners such as IBM, Compaq Computer and Hewlett-Packard . "There's nothing exclusive about it," he said. An announcement regarding the Sun-AOL deal will be made within a few weeks, he noted. Layoffs? Following his appearance, Barksdale would not discuss reports that AOL will lay off some of Netscape's 2,500 employees. Some sources say the layoffs could go as high as 25 percent in a worst-case scenario. AOL CEO Steve Case recently offered bonuses to Netscape employees who agreed to stay on until after the merger. "I'm no longer an officer at Netscape. It would be inappropriate to comment," said Barksdale. However, he confirmed that an announcement related to staffing from AOL is coming this week. As for his retirement, Barksdale said he would make investments in some startup companies and sit on some boards, including his current position on the AOL board.