Originally created 01/30/97

Profits up at Netscape; but Microsoft gains ground



MOUNTAIN VIEW, Calif. - Despite heightened competition from Microsoft, Netscape Communications Corp. earned $8.8 million in the fourth quarter on strong sales of software that manages corporate computer networks.

Netscape, the leading maker of software for browsing the Internet's World Wide Web and managing business networks, also notched a nearly threefold increase in revenues.

Netscape's earnings for the last three months of 1996 amounted to 10 cents a share, equaling analysts' expectations, according to IBES International. The results were released Tuesday after stock markets closed.

In early trading today, Netscape shot up more than 5 percent on the Nasdaq Stock Market before giving up all of its gains and falling. By afternoon, Netscape was down 2.6 percent, or by $1, at $37 a share.

Results were up sharply from earnings of $511,000, or 1 cent a share, for the last three months of 1995, restated to reflect Netscape's acquisition of Insoft Inc. Revenue rose 177 percent to $115.1 million from $41.6 million in 1995's fourth quarter.

Fourth-quarter earnings rose about 14 percent from roughly $7.7 million in the third quarter, and revenue was up 15 percent. Because Netscape is fairly young, its quarter-to-quarter growth is watched more closely than year-ago figures.

But even as the Mountain View, Calif.-based company released its results, archrival Microsoft Corp. pointed out recent research showing that it is making inroads against Netscape in the markets for browsers and business servers, the powerful machines that manage computer networks.

Netscape's share of the browser market is currently 70 percent, down from 87 percent last spring while Microsoft's rose to 28 percent from 4 percent, according to Zona Research Inc. of Redwood City, Calif.

Microsoft, the world's biggest independent software company, is fighting Netscape's Navigator by giving away its own Explorer software for cruising the Web.

Netscape has battled back with new software for corporate intranets - private computer networks increasingly popular among businesses - a lucrative market Microsoft also has gone after. As of last September, Netscape still enjoyed a 75 percent share of the market, according to Zona. But Microsoft, which didn't ship its server software until early last year, had won 10 percent.

During the quarter, Netscape introduced new software for corporate networks that combines the company's browser with business programs. The company during 1996 shipped 1 million server programs.

For the year, Netscape earned $20.9 million, or 24 cents a share, compared with a loss of $6.6 million, or 9 cents a share for 1995. Revenue rose 305 percent to $346.2 million from $85.4 million.