Netscape To Post Loss, Shares Plunge

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 nonrecurring
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 over 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, which it had to since it had no multiple revenue
streams like Microsoft.


In short, perhaps Netscape blew its lead in many ways and may need the
strength of an IBM (NYSE:IBM) or Sun (NASDAQ:SUNW) to really compete in the
future. Netscape up close in tomorrow’s Internet Stock Report.

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