Netscape Breaks Even for 2Q

In what’s been a year of ups and downs for Netscape Communications
thus far, the company posted break-even results for the second quarter following a recent strategic shift aimed at growing its software division and Netcenter Web site.

Late yesterday the company announced revenues of $127.2 million and net income of $0.0 million for the three month period ending April 30, 1998.

In comparison, revenues from the previous quarter ending December 31, 1997 were $125.3 million, and net losses during that time were $88.3 million, or $0.98 per share.

It should be noted that the company went from a calendar year as of the end
of December to a fiscal year ending in October. Netscape took charges
related to restructuring in the changeover month ending in January.

Revenues generated from enterprise software and services comprised $96.1 million for the quarter, in contrast with $91.4 million for the previous quarter.

Netscape said in an earnings statement that its focus shifted more to enterprise solutions and the Netcenter portal site following a January reorganization.

Also in January, in a move aimed at competing more closely with Microsoft in the browser market, the company began giving away its Communicator and Navigator software for free, and announced that it was making the Communicator 5.0 source code available via the site.

Netscape is also making a shift in strategy to compete more directly with leading Internet portals such as Yahoo!, Excite, and Lycos, and recently rolled out an expansive campaign known as “Project 60” aimed at boosting its Netcenter “front door” offerings. The company reported earnings of $31.1 million ending April 30, 1998 for the Web site, a jump from the previous quarter’s $21.3 million.

As part of its ongoing efforts to grow Netcenter, Netscape recently announced deals with search engine leaders such as Excite, Alta Vista, Infoseek, Look Smart, and Lycos.

As reported on, Yahoo! last week declined to renew its search partnership with Netscape, a sign that the companies’ relationship will become more competitive in nature with Yahoo! pitted against Netcenter for traffic.

Separately, albeit at a late stage in the game, Netscape partnered with USA.NET to offer users a free e-mail service through the portal site.

Netscape sealed several significant deals in the second quarter, one of which saw financial giant Citibank signing a worldwide agreement to license Netscape’s electronic commerce and server software to create an e-commerce infrastructure.

Netscape also announced on May 4 an agreement with Excite under which the navigation guide agreed to pay Netscape $70 million to provide search services to the software company. Excite said it expected to garner about 10 million page views a day from the deal.

Netscape president and CEO Jim Barksdale said in a statement that the quarterly results reveal that the company’s new strategy is finding favor in the marketplace, and noted the increasingly important role that Netcenter is playing in the company’s business plan.

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