Netscape pain could mean free Communicator
Netscape last night announced a less than hearty welcome to the New Year, saying it expected heavy losses for its fourth quarter at the end of this month, and announcing lay-offs and other restructuring plans. A spin-off is likely to be that the Communicator Net client becomes a freebie like Microsoft's Internet Explorer (IE).
The company expects losses of $85-89 million on revenues of $125-130 million. That black ink is essentially accounted for by a $52 million charge relating to a recent spate of merger activity and a $35 million charge relating to the restructuring. A black spot was Europe which, with Asia numbers included, gleaned just $7 million in revenues for the quarter.
James Barksdale said that the company was already well on the way to a more efficient model of doing business, saying telemarketing and telesales are already outsourced. Now renewals will be also be handled externally.
Barksdale added he is attempting to move Netscape's core business further away from the browser client and more towards solutions and commerce.
"We've been working hard to get that part of our business [browsers] down," he said, pointing to the fading influence of browsers in the Netscape product mix.
Barksdale once again claimed that Microsoft's aggressive tactics are "illegal and anti-competitive" but he didn't deny that Netscape could itself give away browsers in the near future. An announcement regarding a change in tack on browser pricing will likely be made in the next fortnight. 80 per cent of IE users said they use it because it is bundled or given away free, he claimed.
Netscape will take a $35 million charge which will include the costs of making staff redundant but the company declined to comment on which jobs will be affected except to say that management changes will be minimal. The company also said it expected future savings from streamlining facilities and IT infrastructure.
The company is pinning its hopes on electronic commerce to fuel a new bout of growth.
"I don't care if you're a railroad, you're interested in electronic commerce," Barksdale said. "Is it [a bigger opportunity] than messaging? I don't know [but] billion dollar companies like Dell and Cisco have legitimised that area. We think we have killer products in that area with [recent acquisitions] Actra and Kiva." Actra is an Internet commerce software developer and Kiva is a maker of application server commerce software.
Talking about why Netscape had lost for the quarter, Barksdale only half revived the war with Microsoft, saying that its rival actions weren't purely the reason for Netscape hurting.
"Microsoft was one of the principal factors but we also recognise another that has almost nothing to do with Microsoft ... time-to-close," he said, noting that more sophisticated applications meant sales cycles were much longer.
Separately, Barksdale followed a recent Microsoft announcement by saying that Netscape would slow down the frantic rate at which it has released products in the past. The emphasis now will be "not so much on speed and newness of features but on product quality. [Customers say] we've been producing almost too much, too fast". Barksdale said that rate had been a symptom of the fact that Netscape had previously been dependent on browser revenues for a large chunk of its revenues.
He added that Netscape doesn't plan to pull products but some planned features of products could be canned.
The news was "disappointing" but correction was moving "at a good clip" he concluded.