January 5, 1998 2:50 PM PST
Netscape expects to report loss
News of the preliminary warning sent Netscape shares tumbling nearly 21 percent to hit a new 52-week low, ending the day at 18-9/16, down 4-13/16.
Netscape said its fourth-quarter net loss likely will range between $85 million and $89 million. Excluding $87 million in merger and restructuring charges, the company anticipates a loss of between $14 million and $18 million, or 15 cents and 19 cents a share.
"While our products are doing extremely well in the marketplace and we're fighting the market-share battle effectively, the revenue is being diminished because of price pressure from Microsoft's free browser," said Mike Homer, Netscape vice president of sales and marketing.
Wall Street analysts had expected the company to report a profit of 14 cents a share for the quarter, according to First Call.
Netscape's revenues, meanwhile, are expected to range between $125 million and $130 million for the quarter, up between 9 percent and 13 percent over year-ago figures.
The company said the lower-than-expected revenues are due to pricing pressure on its standalone client software, competitive pricing on its enterprise software, and the longer selling cycles that typically go with new software products.
"We planned to grow our enterprise sales and support revenue in the fourth quarter to a greater extent than we were able to," Jim Barksdale, Netscape's chief executive and president, said in a statement. "To accelerate our transition to an enterprise software company, we plan to streamline our business to focus on key enterprise market opportunities and eliminate unrelated expenses."
Just last week the company said it would have an all-Java browser ready for network computers and other clients by July. The new browser will be a pure-Java version of Navigator that the company is targeting as the client environment of choice for Java-based NCs.
Netscape said it plans to reduce its overall expenses and restructure its business beginning immediately. As a result, the company said it has taken a fourth-quarter restructuring charge of about $35 million in connection with staff reductions, closing of certain facilities, and other write-offs. The restructuring is aimed at enabling the company to focus its remaining resources on the enterprise software business.
For the coming year, the company said it will post a net loss of between $113 million and $117 million. Excluding merger and restructuring costs, however, Netscape will post a profit of $7 million, or 8 cents a share, to $10 million, or 11 cents a share.
Reuters contributed to this report.