Shares in Netscape Communications, the once high-flying internet software start-up company, fell on Monday after it predicted lower sales and a $85 million-$89 million (52 million-54 million) net loss in the fourth quarter.
Netscape blamed fierce competition from Microsoft for its fall into loss, which few analysts had foreseen. In morning business on Wall Street, the companys stock was trading at $18 3 /16 - down $5 3 /16, or 22 per cent, on Fridays close, and the lowest level since the company went public in August 1995.
At the height of internet investment two years ago, the company, which initiated the market for internet browsing software in 1994 with its Netscape Navigator, was valued at more than $5 billion. Netscape Navigator was the first commercial software to allow personal computer users to find their way around the internet. At one stage it commanded more than 75 per cent of the browser market. But over the past 18 months Microsoft, the worlds largest software company, has been offering its Internet Explorer browser free or bundled together with Microsofts popular Windows operating system.
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In October, the US Department of Justice charged Microsoft with using its control of PC software to promote its Internet Explorer unfairly. Netscape said heightened competition in the fourth quarter depressed revenues from the more important enterprise market - software that helps corporations develop internal mini-internets. It indicated it would shortly abandon the charge of up to $59 a copy it levies on corporations buying its browser software.
Netscape plans to focus on its enterprise software products. Like other information technology companies including 3Com, Oracle and Sybase where earnings have also fallen short of expectations, Netscape cited troubled economic conditions in Asia.
The companys growth, unbroken since its foundation in 1994, went into reverse in the fourth quarter. Sales, which were $150 million in the previous quarter, sank to $125 million-$130 million, the company said. It expected a net loss for the quarter just ended of $85 million-$89 million, or 88-92 cents a share. That includes charges related to restructuring and two acquisitions. The company expects a net loss of $14 million-$18 million, or 15-19 cents a share. For the full year, Netscape expects a loss of about $113m-$117 million or $1.20-$1.24 a share after charges, on revenues of about $534 million-$539 million.
In 1996, it recorded a net profit of $20.91 million on revenues of $346m. The group plans to lay off employees and close facilities.
Nicholas Denton in San Francisco