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July 23, 1997updated 05 Sep 2016 12:54pm

ACQUISITION CHARGES HIT NETSCAPE BUT Q2 REVENUES SURGE AHEAD

By CBR Staff Writer

Due to a series of acquisitions and the sell off of most of its Navio subsidiary to Oracle Corp, plunged Netscape communications Corp deep into the red in the second quarter, but without charges it came in on target as far as Wall Street was concerned yesterday. The Mountain View, California company reported second quarter net losses of $43.8m, after merger – related charges totaling $52.6m, against profits of $906,000 last time, which included similar charges totaling $6.1m. The charges this time were purchased research and development from the acquisitions of DigitalStyle Corp and Portola Communications in May, and amount to almost the entire value of the stock transaction for the companies. Companies can write the acquisition off in this way when all it is paying for is the intellectual property and the employees, although DigitalStyle had released some web graphics products. Portola was a messaging company. Navio was the subsidiary developing cut-down version of the company’s flagship Navigator browser technology. Oracle took it over leaving Netscape a minority stake in late May. There was no word on the terms, thought Oracle was to incur charges totaling $60m. But whatever the cost to Oracle, the transaction doesn’t appear to have benefited Netscape too much financially. Oracle wanted it to enhance its network computer software. Once again, around a quarter of Netscape’s revenues came from services, as it aims to branch out from its product base to fend off the threat of Microsoft Corp. Just prior to the Navio announcement Netscape revealed that it saw Microsoft eating into some of its core server markets, but its revenue growth continues to remain impressive. During the second quarter it released SuiteSpot version 3.0 and the first full version of Communicator, its Navigator follow-up. Cash at the halfway stage stood at $59.8m, down from $87.5m at the end of last year. Research and development costs are still high, at 23.5% of second quarter revenues.

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