Netscape Ekes Out Earnings

(May 27, 1998)  Netscape Communications Corp. reported late Tuesday that it had nominal earnings of $8,000 for the second quarter of its fiscal year.  It earned $7.3 Million in the second quarter of 1997.

Netscape's revenues were $127.2 Million, up from $120.5 Million from the second quarter of 1997.  Netscape's revenue included a $8.3 Million gain from the one time sale of securities.

Netscape has been hurt by the loss of revenue from the sale of its browser software, which it now gives away for free, in response to competition from Microsoft.  It is attempting to reform itself into an enterprise software and Internet portal company.

Netscape is one of the main instigators and beneficiaries of the Department of Justice's legal actions against Microsoft.   In a Complaint filed on May 18 in U.S. District Court in Washington DC, the government asked the Court to require Microsoft to include Netscape's browser in its Windows operating system software.

Netscape (NSCP) shares were down 1 point on Tuesday, to close at 23 7/8.  However, the earnings report came after the close of the market.

Netscape's Press Release

Netscape Reports Revenues of $127.2
Million for Three Months Ending April 30, 1998
Sees Growth in Enterprise Software, Services and Netcenter

MOUNTAIN VIEW, Calif. (May 26, 1998) -- Netscape Communications Corporation (NASDAQ:NSCP) today reported revenues totaling $127.2 million for the three months ending April 30, 1998, as compared to revenues of $125.3 million for the three months ending December 31, 1997. Net income for the three months ending April 30, 1998 was $0.0 million, or $0.00 per share, compared with a net loss for the three months ending December 31, 1997, of $88.3 million, or a loss of $0.98 per share.

"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 Jim Barksdale, president and chief executive officer of Netscape. "Our decisions to broaden our enterprise solutions business through acquisitions and to invest in our Internet portal site are now bearing fruit, with both parts of the business showing steady growth. In the past quarter, we announced that industry-leading companies such as Citibank, NuSkin International, Netcom, Litton Industries and Hong Kong Telecom have joined our hundreds of existing corporate customers in choosing Netscape as a partner for building their online franchises and transforming the way they do business. In addition, we have begun to build out Netscape Netcenter as a major Internet portal with all of the essential business and consumer services, and we plan to continue to add services aggressively through strategic associations with brand-name content providers."

Netscape's enterprise software and services comprised $96.1 million in revenue for the three months ending April 30, 1998, as compared to $91.4 million for the three months ending December 31, 1997. Revenue from Netscape Netcenter, the web site side of Netscape's business, was $31.1 million for the three months ending April 30, 1998, as compared to $21.3 million for the three months ending December 31, 1997.

Netscape made a number of strategic moves in the first months of the 1998 calendar year. The company reorganized in January to provide greater focus on its enterprise solutions and Netcenter. Netscape also announced in January that it would make its client software free, and that it would release the source code for its Communicator 5.0 client on the Internet. Netscape estimates that there were more than 250,000 downloads of the source code, released March 31, from the mozilla.org Web site in the first month of the code's availability. Developers have also made significant contributions of code back to the mozilla.org site. Since the free client announcement, Netscape's client marketshare has held steady at approximately 60 percent, according to Netscape's composite of leading Internet sites that report browser share statistics. Netscape's client software serves to seed the market for Netscape's enterprise solutions and Netcenter.

In the three months ending April 30, 1998, Netscape released the first new products resulting from its acquisitions of Kiva Software and Actra Corporation at the end of 1997. In February, Netscape unveiled its Netscape Application Server 2.0 software, the industry's fastest and most scalable Internet application server for deploying business-critical applications on the Internet and Extranets. The company also announced that Hong Kong Telecom and E-Trade were using Netscape Application Server to run key online applications. In April, Netscape released Netscape PublishingXpert 2.2, an online selling solution within the Netscape CommerceXpert suite of packaged applications for commerce exchange, procurement and selling on the Internet.

In the quarter, the company entered into a significant worldwide agreement to license its electronic commerce software to Citibank. Citibank has licensed the Netscape CommerceXpert family of packaged Internet Commerce applications as well as Netscape's line of server software including Netscape Application Server and Netscape Directory Server to build a service-ready infrastructure for electronic commerce applications.

Netscape announced other significant customer wins in the quarter, including licenses with Netcom On-Line Communication Services, Inc., which is leveraging the Netscape Messaging Server technology in Netscape SuiteSpot Hosting Edition to host email services for its customers; Nu Skin International, which selected Netscape's server software to enable its distributors around the world to grow their businesses and place and track sales, inventory and shipments across an Extranet; and Litton Industries, which has deployed Netscape server software to enable its employees to share corporate information and best practices, manage budgets and streamline vendor approval processes via its Intranet.

In February, Netscape upgraded its popular Netscape SuiteSpot server software line with the release of SuiteSpot 3.5 for companies deploying large-scale Intranets and Extranets. In April, the company also previewed its high-performance messaging technology, code-named "Troopers ISP," that will enable Internet Service Providers (ISPs) and telecommunications companies to provide scalable and reliable messaging services to millions of users.

Netscape also continued to develop Netscape Netcenter into a major Internet portal for both business users and consumers. In the quarter, Netscape entered into a multi-faceted strategic partnership with Excite, Inc., to build out channels jointly for Netscape Netcenter and to create a co-branded search service. The deal, which combines the strength of two of the biggest names on the Internet, serves as a catalyst for Netscape's push into the Internet portal space. Separately, Netscape announced a strategic business agreement with USA.NET to offer a free email service, called Netscape WebMail by USA.NET, on Netcenter. The company also expanded its offerings in the Community and Marketplace sections of the site, and created a Netcenter Member Directory service based on the Netscape Directory Server 3.0 software to keep track of information for its approximately five million Netcenter members.

Netscape Communications Corporation is a premier provider of open software and services for linking people and information over enterprise networks and the Internet. The company offers a full line of Netscape Navigator clients, servers, development tools, commercial applications and professional services to create a complete platform for next-generation, online applications. Traded on NASDAQ under the symbol "NSCP," Netscape Communications Corporation is based in Mountain View, California.