Despite a boost from an analyst, shares in Netscape Communications Corp. fell slightly today, after last night's break-even earnings report.
Netscape shares, after being down 7/16, or 1.36 percent, at $31 11/16 in midday trading, slumped slightly to close down 1.25 at 30.875. On Tuesday, the company earned $88,000 on sales of $150.2 million, beating analysts' expectations of a 2-cent-per-share loss.
Earlier in the day, Salomon Smith Barney analyst Marc Usem upgraded Netscape from neutral to buy. But other analysts did not follow suit, and Netscape seemed to follow the market's general drift down.
Recovery an open question
With analysts including Alex Brown's Mary McCaffrey predicting revenues in the $144 million range, Netscape-watchers are still questioning whether the company's third quarter performance proves it is moving toward recovery, though one, Hambrecht & Quist's Daniel Rimer, thinks the results show Netscape is "back on track."
The company, bruised from its Internet browser skirmishes with Microsoft Corp., has refocused its energies on the enterprise software market and on its Netcenter portal, two areas Chief Executive Officer Jim Barksdale has pointed to as Netscape's strongest assets.
As of midday Wednesday, none of the firms had announced ratings changes.
After falling victim to Microsoft Corp. (Nasdaq:MSFT) in the Internet browser battle, Netscape (Nasdaq: NSCP) repositioned itself by focusing on the enterprise software market and throwing a ton of money into its Netcenter gateway.
The $150 million in sales was higher than most analysts expected. Although Netscape didn't blow away the Street estimates, it appears that it might be on the road to recovery.
A moving target
Year-to-year comparisons for Netscape are difficult since the company shifted its fiscal year last quarter. For the three months ending April 30, the company broke even with revenue of $127 million. By using some creative accounting, Netscape threw a $55 million loss in January into a financial black hole and forgot about it.
Shares of Netscape have been volatile, hitting a high in the 40s on portal euphoria and its Netcenter site and dipping into the 20s as enterprise software stocks fell.
"The stock has been completely schizophrenic," said McCaffrey. "When you see a spike it's because of the portals and it doesn't hold, if it dips it's because of the enterprise. I don't know how you get out of that erratic trend."
Better than anticipated
While Rimer was disappointed with Netscape's enterprise services revenue, which dipped from last quarter despite an intensive marketing push, the company beat his estimates -- which were among Wall Street's most optimistic -- due to strong growth in Netcenter and enterprise product revenue.
Lori Mirek, Netscape's senior vice president of marketing, said the company has finally found its niche with some of its enterprise applications. "These are areas where Microsoft and Lotus/IBM are not directly focused," she said.
In the quarter, sales from its enterprise software and services business grew 16 percent during the quarter to $111.6 million, compared to $96.1 million in the previous quarter. Revenue from Netscape Netcenter increased 24 percent to $38.7 million for the quarter, as compared to $31.1 million for the previous quarter.
We'll take it
"Overall, we are pleased with the results we posted for the quarter," said chief executive Jim Barksdale in a prepared release. "We're seeing strong momentum in both the enterprise software and Netcenter businesses as demonstrated by the number of significant customer wins announced during the quarter."
Also, Netscape announced that Bill Campbell, chairman of the board of directors at Intuit Inc., will join its board of directors, replacing Adobe Systems Inc.'s John Warnock
Analysts said it was important for Netscape to beat the Street number this time around because even though most Internet companies are still losing money, they have typically shown losses that were smaller than Wall Streets forecasts, along with sales and traffic to their Web sites that exceeded expectations.
Nine of the 14 institutional investment firms following the stock rate it a "hold."
Netscape shares hit a 52-week high of 44 5/8 in September before tumbling to a low of 14 7/8 in February.
Material from Reuters was used in this report.
Despite a boost from an analyst, shares in Netscape Communications Corp. fell slightly today, after last night's break-even earnings report.
Netscape shares, after being down 7/16, or 1.36 percent, at $31 11/16 in midday trading, slumped slightly to close down 1.25 at 30.875. On Tuesday, the company earned $88,000 on sales of $150.2 million, beating analysts' expectations of a 2-cent-per-share loss.
Earlier in the day, Salomon Smith Barney analyst Marc Usem upgraded Netscape from neutral to buy. But other analysts did not follow suit, and Netscape seemed to follow the market's general drift down.
Recovery an open question
With analysts including Alex Brown's Mary McCaffrey predicting revenues in the $144 million range, Netscape-watchers are still questioning whether the company's third quarter performance proves it is moving toward recovery, though one, Hambrecht & Quist's Daniel Rimer, thinks the results show Netscape is "back on track."
The company, bruised from its Internet browser skirmishes with Microsoft Corp., has refocused its energies on the enterprise software market and on its Netcenter portal, two areas Chief Executive Officer Jim Barksdale has pointed to as Netscape's strongest assets.
As of midday Wednesday, none of the firms had announced ratings changes.
After falling victim to Microsoft Corp. (Nasdaq:MSFT) in the Internet browser battle, Netscape (Nasdaq: NSCP) repositioned itself by focusing on the enterprise software market and throwing a ton of money into its Netcenter gateway.
The $150 million in sales was higher than most analysts expected. Although Netscape didn't blow away the Street estimates, it appears that it might be on the road to recovery.
A moving target
Year-to-year comparisons for Netscape are difficult since the company shifted its fiscal year last quarter. For the three months ending April 30, the company broke even with revenue of $127 million. By using some creative accounting, Netscape threw a $55 million loss in January into a financial black hole and forgot about it.
Shares of Netscape have been volatile, hitting a high in the 40s on portal euphoria and its Netcenter site and dipping into the 20s as enterprise software stocks fell.
"The stock has been completely schizophrenic," said McCaffrey. "When you see a spike it's because of the portals and it doesn't hold, if it dips it's because of the enterprise. I don't know how you get out of that erratic trend."
Better than anticipated
While Rimer was disappointed with Netscape's enterprise services revenue, which dipped from last quarter despite an intensive marketing push, the company beat his estimates -- which were among Wall Street's most optimistic -- due to strong growth in Netcenter and enterprise product revenue.
Lori Mirek, Netscape's senior vice president of marketing, said the company has finally found its niche with some of its enterprise applications. "These are areas where Microsoft and Lotus/IBM are not directly focused," she said.
In the quarter, sales from its enterprise software and services business grew 16 percent during the quarter to $111.6 million, compared to $96.1 million in the previous quarter. Revenue from Netscape Netcenter increased 24 percent to $38.7 million for the quarter, as compared to $31.1 million for the previous quarter.
We'll take it
"Overall, we are pleased with the results we posted for the quarter," said chief executive Jim Barksdale in a prepared release. "We're seeing strong momentum in both the enterprise software and Netcenter businesses as demonstrated by the number of significant customer wins announced during the quarter."
Also, Netscape announced that Bill Campbell, chairman of the board of directors at Intuit Inc., will join its board of directors, replacing Adobe Systems Inc.'s John Warnock
Analysts said it was important for Netscape to beat the Street number this time around because even though most Internet companies are still losing money, they have typically shown losses that were smaller than Wall Streets forecasts, along with sales and traffic to their Web sites that exceeded expectations.
Nine of the 14 institutional investment firms following the stock rate it a "hold."
Netscape shares hit a 52-week high of 44 5/8 in September before tumbling to a low of 14 7/8 in February.
Material from Reuters was used in this report.
