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No accounting for Netscape

First Call consensus expected Netscape to report a loss of 10 cents a share for the three-month period.Netscape shares fell 1 to 23 7/8 ahead of the earnings report but edged up in after-market trading.
Written by Larry Barrett, Contributor

First Call consensus expected Netscape to report a loss of 10 cents a share for the three-month period.

Netscape shares fell 1 to 23 7/8 ahead of the earnings report but edged up in after-market trading.

Complicating matters was the company's decision to change its reporting period from the calendar first quarter to a fiscal first quarter beginning in February.

The company reported a loss of 58 cents a share for the month of January. Analysts were expecting a loss of 29 cents per share for January, excluding a number of charges the company decided to deduct from its January sales and earnings.

"The results announced today signal two exciting points: first, that Netscape's strategy is resonating with the marketplace and, second, that Netscape is executing well against that strategy," said chief executive Jim Barksdale in a prepared release.

In a conference call, Barksdale said the January quarter should just be forgotten.

"We think the current results much more accurately reflect the revenue run rate," said Barksdale. "This gives a foundation to think about revenue going forward."

To analysts, however, the results signal a gigantic pain in the neck. Since Netscape chose to change its reporting period, it's almost impossible to accurately compare the company's performance versus the year-ago period.

"It's a very unusual maneuver," said Don Collier, an analyst at ProLytix Corp. "It's obviously an attempt on Netscape's part to soften the impact of a very bad January. Regardless of how they dress it up, it's not a reassuring quarter for investors."

In the first calendar quarter of 1997, Netscape earned $7.3 million, or 8 cents a share, on sales of $121 million. Last quarter, it lost $88.3 million, or 98 cents a share, on sales on $125 million.

Netscape's stock has been one of the few Internet-related issues to flounder in recent months. After peaking at about 49 in July, the stock collapsed to 14 7/8 in January.

Nine of the 13 institutional brokerage firms following the stock maintain either a hold or sell recommendation.

In the quarter, Netscape's enterprise software and services accounted for $96.1 million in sales compared to $91.4 million for the three months ending December 31, 1997. Sales from Netscape Netcenter, the Web site side of Netscape's business, was $31.1 million for the first quarter, up from the $21.3 million recorded last quarter. Netcenter currently gets about 8 million page views a day, the company said.

Netscape officials said the company has maintained 60 percent of the browser market.

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