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Netscape misses target
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January 27, 1998: 5:32 p.m. ET
Company blames declining browser revenue, slower overall growth
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NEW YORK (CNNfn) - Netscape Communications Corp. said Tuesday declining browser revenue and slower-than-expected growth rates were responsible for disappointing fourth-quarter earnings.
Netscape reported a net loss of $88.3 million, or 92 cents a share, in the quarter ended Dec. 31. Those results include non-recurring charges of $79.3 million related to research and development and acquisitions.
The results were released after the close of trading. Netscape (NSCP) shares ended the day off 1-1/4 to 16-7/8. No trades were reported in after-hours.
Excluding those one-time charges, Netscape lost $20.8 million, or 22 cents a share, compared to a net income of $8.2 million, or 9 cents a share, a year ago. First Call, which excludes one-time charges from its earnings estimates, had predicted a loss of 16 cents.
For the year, Netscape lost $115.5 million, or $1.23 a share, including charges of $108.9 million for research and development and acquisitions. The loss also includes $23 million in restructuring charges.
Netscape said it is taking the restructuring charge to cover layoffs announced earlier this month. At that time, Netscape said it might trim 400 jobs from its payroll, although the company now expects the number to be closer to 300.
Excluding those charges, Netscape earned $4.7 million, or 5 cents a share for the year, compared to $24.4 million, or 27 cents a share, in 1996. Those numbers also fell below First Call estimates of 14 cents.
Fourth-quarter revenue grew 9 percent to $125.3 million compared to $115.2 million in 1996. Revenue for the year grew 54 percent to $533.9 million compared to $346.3 million in 1996.
Netscape President and Chief Executive Officer James Barksdale blamed the lower-than-expected results on several factors.
"A decline in stand-alone client revenue and slower-than-expected growth in our enterprise sales and support revenue left us short of our goal.
"We have taken immediate action to address these issues by streamlining our business to focus on key enterprise market opportunities and eliminating unrelated expenses," he said.
Last week, Netscape announced it would start giving away its Navigator browser and Communicator suite, which includes e-mail, scheduling and conferencing capabilities in addition to a "push" client for automatically downloading content over the Internet.
The company also said it would make the program's source code freely available which allows other programmers to build in their own custom features. However, modified versions cannot be sold by anyone other than Netscape.
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