Three weeks ago in the Internet Stock Report we projected that Netscape
(NASDAQ:NSCP) should ditch the software business in favor of being a
content company. Rumors February 5 have IBM, Sun, or AOL acquiring parts or
all of the once-soaring Internet software and portal to the Web.
Netscape market capitalization has sunk to below half of where it stood the
past 52 weeks. At $19.25 a share, NSCP is down dramatically from its $49.50
per share high the past year. Following $115 million loss in the fourth
quarter
and declining browser share, along with stiff competition on the server
side from rival Microsoft, NSCP said it was reevaluating its strategy.
Our thinking may have AOL (NYSE:AOL) acquiring NetCenter, Netscape’s
content site. With 2.6 million users, NetCenter was named the top business Web
site for 1997 by Media Metrix–something AOL drools over as it seeks a Web
portal to break out of its proprietary shell into the wild Web. We
estimate NetCenter could fetch $260 million or $100 per user.
Netscape’s software side, about two-thirds software and one-third service,
could
fetch about $3 billion, or what we estimate may be 5x 1998 sales. Suitors
that we see could fit the bill may be IBM or Sun.
So what began just three short years ago as “Mozilla” (Microsoft killer)
may be headed for a sequel under the direction of others. Maybe it’s just more
rumors, but then again, maybe not.
