What goes up, must come down. Following that principle, Netscape today posted the expected black quarter it had warned of just a few weeks ago.
Once the shooting star of the Net and one of the fastest growing companies of all time, Netscape hit the earth with a thud, losing big and seeing consecutive quarterly sales fall for the first time in its short history.
In its recent profits warning, Netscape CEO Jim Barksdale declined to blame Microsoft's tactic of giving away browser software as the sole reason for its woes. Instead, the firm said that its move to focus on enterprise and back-end software and services had meant longer sales cycles before revenues came to fruition. Evidencing that shift in focus, browser revenues made up just $17 million, or 13 per cent of all sales, for the quarter.
In the end, Netscape lost a whopping $88.3 million compared to an $8.2 million profit a year ago. Year on year sales for the quarter rose slightly to $125.3 million from $115.2 million. In a slightly kinder light, non-recurring charges particularly those relating to acquisitions, accounted for all but $20 million of the loss
At least Netscape can point to the fact that it has already taken corrective action in terms of planning about 400 layoffs and making browsers and source code free. The latter strategy is intended to keep Netscape software everywhere so it becomes the "seed corn" to grow enterprise software and services sales, and drive visits to its Web site to attract advertising spend.