Internet Market Close Report for 1998.01.05

ISDEX & Market Moves

  05-Jan-98 % change point change
ISDEX 101.22 0.80% 0.80
NASDAQ 1,594.12 0.80% 12.59
DJIA 7,978.99 0.18% 13.95

  • Netscape shares fell nearly 20% to $18.75 each as the Web software firm warns that it expects to post fourth quarter losses of between $85 million to $89 million or $0.88 to $0.92 per share. Before we slam this too much, however, $52 million was for non-recurring merger-related charges while an additional $35 million went for restructuring. So that’s $87 million on a one-time charge.

    Still, the loss highlights Netscape’s rise and fall the past three years. After its early lead and bragging rights Netscape met an opponent with deeper pockets and an installed base to leverage in Windows, Microsoft (NASDAQ:MSFT). Netscape pioneered the free distribution model, letting people download its popular Navigator browser for free, thus giving it a huge installed base itself.

    Like it does so many times, Microsoft simply picked up on the formula and came out with its own flavor, Explorer. It is free while Netscape began to charge for its browser (it had to since it had no multiple revenue streams like Microsoft).

    Several analysts downgrade NSCP. Without non-recurring charges NSCP net income for 1997 would have been $7 million to $10 million, or $0.08 to $0.11 per share, just under our forecast of $0.12 EPS.

  • Yahoo (NASDAQ:YHOO) and Softbank take a stake in privately-held free home page service GeoCities which will get premier placement on Yahoo as community builder. Softbank invests $25 million while Yahoo will issue $5 million in stock for equity in GeoCities. We heard Lycos and others were interested in acquiring GeoCities outright but that GeoCities may have been asking too much. Yahoo’s move looks safer, get a piece and let GeoCities prove its revenue model.

    $4.91 million net income, $0.12 EPS, for its quarter ending Dec. 31, 1997 vs. $2.26 million the same period in 1996. Without charges net income would have been $6.56 million, or $0.16 EPS, topping First Call’s $0.14 EPS consensus. Revenue soars 100% to $51.1 million as transactions in the quarter jump 129% to a record 1.5 million.

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