Netscape Communications Corporation

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Netscape Communications Corporation

founded: 1994

Contact Information:

headquarters: 501 e. middlefield rd.
mountain view, ca 94043 phone: (415)254-1900 fax: (415)528-4125 email: [email protected] url: http://home.netscape.com

OVERVIEW

Netscape Communications Corporation develops, sells, and supports computer software products for the Internet and other networks. These products help individuals and organizations worldwide exchange information, discuss items of interest, research a wide variety of subjects, and conduct business electronically.

The company was founded in Mountain View, California in April 1994. Capitalizing on the popularity of the World Wide Web and the Internet, the company became a publicly traded company in August 1995. On the first day of trading, shares soared to $71, after initially being offered at $28 per share.

The company's software line includes three groups of products: client or browser software, server software, and commercial applications. Its browser, Netscape Navigator, can be used with a variety of computer operating systems and enables users to locate and view information on the World Wide Web. The server line of products allows companies or individuals to create and maintain World Wide Web pages for publishing information and conducting business on the Internet. The company's commercial applications software enables companies to conduct full-scale electronic business.

COMPANY FINANCES

In December 1997, Netscape posted annual revenues of $533.9 million, up from $346.2 million in 1996 and $80.7 million in 1995. Due to increased costs of doing business, however, total net income fell substantially between 1996 and 1997, from $20.9 million to a loss of $115.5 million. As of June 1998, stock shares were selling at $23, down from a high of $47 in July 1997, but up from a low of $17 in February 1998. More than 3 million shares are held by investors.

ANALYSTS' OPINIONS

According to David Rosenfield in Value Line Investment Survey, "Netscape's survival depends on the degree to which corporations adopt intranets—private corporate networks that use the Internet ... and the number that choose Netscape as their strategic vendor." It is expected that spending for Internet and intranet software will increase dramatically over the next few years; however, Netscape faces stiff competition from Microsoft Corporation and IBM, two of the most powerful companies in the industry.

HISTORY

Marc Andreessen, one of the cofounders of Netscape Communications Corporation, was a student at the University of Illinois when he began working at the University's National Center for Supercomputing Applications in 1993. Recognizing the potential of the World Wide Web and the Internet, Andreessen and several other students wrote a software program called Mosaic. Mosaic, a browser, was a great step forward in making it easier to use the vast amounts of information offered on the World Wide Web. Mosaic software was offered free of charge by the University, and in the first year more than two million copies were downloaded.

In April 1994, Andreessen and James H. Clark co-founded a company called Mosaic Communications Corporation. Six months later, the name was changed to Netscape Communications Corporation. Netscape Navigator, a more powerful version of the earlier Mosaic software program, was one of the company's first products.

In December 1994, the company was almost out of money, and employees were being laid off. At the time, new chief executive James Barksdale was determined to try to make the company a success. Barksdale is quoted by Robert D. Hof in Business Week as saying, "This rocket is going to take off, or it's going to crash into the ground. So, ladies and gentlemen, strap it on!"

STRATEGY

Netscape Communications Corporation's strategy has been to identify the networking needs of businesses and to develop solutions to fit those needs. Speed is critical to being successful in high-tech companies. Changes occur almost every day and competitors relentlessly pursue an advantage. According to Peter Currie, Chief Financial Officer of Netscape Communications Corporation, "a year's worth of change happens in a couple of months—a pace known as 'Internet Time'." Companies can succeed only by offering new and better products sooner and at less expense than everyone else.

Marketing is also extremely important. Netscape Communications Corporation's web site has been critical to its success and has almost four million visitors a day. The home page provides users with technical support, company news, and access to the company's electronic store, where goods and services can be purchased.

INFLUENCES

Use of the World Wide Web, virtually unheard of in 1994, grew by leaps and bounds in 1995. Netscape Navigator made the Internet popular and usable by millions of people. Initially, the company gave most copies of Netscape Navigator away for free, which gave tremendous name recognition to the company. Within a short period of time the company controlled 85 percent of the World Wide Web browser market. First year sales were approximately $81 million. By 1996, the company had grown from 400 employees to almost 1800, with sales of $346 million, a one-year growth rate of a staggering 329 percent.

CURRENT TRENDS

Netscape Communications Corporation has been able to move quickly to establish itself in a very short time. However, other companies, anxious to reap the benefits of the explosion in use of the World Wide Web, are also working on "Internet Time." Chief among these companies is Microsoft Corporation, which is determined to become the dominant provider of software for the World Wide Web. Microsoft introduced its Internet Explorer browser in 1995, and incorporated it into its Windows 95 operating system. Netscape countered with its "Customer Choice" campaign in December 1997, allowing Internet Explorer users to switch to Navigator easily while online.

Microsoft Corporation's entry into the development of products for the World Wide Web cut into Netscape Communications Corporation's revenues. Stock prices fell and market shares dropped. Still, the company increased revenues for the fourth quarter of 1997 by 9 percent over the same quarter the previous year.

Competition is fierce among software developers that hope to provide products for companies that are looking for new ways to reach increasing numbers of Internet users. Commercial use of the Internet is expected to grow dramatically through the year 2000, and companies are expected to use Internet technologies to improve internal business operations as well. Netscape Communications Corporation currently offers a broad line of software products and tools, targeted primarily to corporate intranets and commercial applications. However, it competes against older, more established companies such as Microsoft Corporation, Oracle Corporation, and Lotus Development Corporation, a subsidiary of IBM—companies with much larger resources for research and development of new products.

PRODUCTS

Netscape Communications Corporation offers a wide array of products that link people and information over the Internet and intranets. The products offer client or browser software, server software, and commercial software. The browser product line includes Netscape Navigator and a number of other software enhancements designed to extend its capabilities. Server products allow providers to create, organize, and present networked information including World Wide Web access and e-mail. Server products include: Netscape Mail Server; Netscape News Server; Netscape Proxy Server; Netscape Enterprise Server; and Netscape Catalog Server. These five products are sold separately or are offered as a group known as Netscape SuiteSpot. Other server products include Netscape Communications Server; Netscape Commerce Server; and Netscape FastTrack Server. A new version of Netscape SuiteSpot and an enhanced client, Netscape Communicator, are designed to work together to provide new and enhanced server/client software .

FAST FACTS: About Netscape Comunications Corp.

Ownership: Netscape Communications Corporation is a publicly owned company traded on the NASDAQ stock market.

Ticker symbol: NSCP

Officers: James L. Barksdale, CEO; Peter L.S. Currie, CFO

Employees: 2,000

Chief Competitors: Netscape produces tools for Internet, intranet, and other computer network platforms. Its primary competitors include: Microsoft Corporation; Lotus Development Corporation, a subsidiary of IBM; and Oracle Corporation.

The company's commercial software products can be used to help organizations and businesses sell goods and services on the Internet. Products include: Netscape Merchant System, which allows users to display and sell goods electronically; Netscape Publishing System, designed for users who want to create subscription-based online publications; and Netscape Community System, which gives organizations the ability to create virtual communities.

CORPORATE CITIZENSHIP

A company-wide food and teddy bear drive is held during the Christmas season to assist needy families, and employees are involved in the "Christmas in April" project, which provides home repair help to low income and elderly residents. Many employees participate in the San Francisco AIDS Walk and in marathons to raise money for leukemia research.

GLOBAL PRESENCE

Use of the Internet is increasing around the world, and Netscape Communications Corporation has ten offices in Europe and five in the Asian Pacific region. Many large international companies, including those in Germany, Sweden, Thailand, and Mexico, are using Netscape browser and server software for their corporate intranets. The company has World Wide Web sites in more than ten foreign languages to help customers and users around the world. Ninety-two of the top 100 companies listed on Fortune Magazine's top 500 are Netscape customers, according to the company.

CHRONOLOGY: Key Dates for Netscape Communications Corp.

1993:: Marc Andreessen begins work at the University of Illinois' National Center for Supercomputing Applications
1994:: Andreessen and James H. Clark form Mosaic Communications Corporation; change name to Netscape Communications Corporation
1995:: Becomes a publicly traded company
1996:: Company grows from 400 to 1800 employees; has sales of $346 million, a one-year growth rate of 329 percent
1997:: Launches "Customer Choice" campaign to counter Microsoft

EMPLOYMENT

Netscape Communications Corporation's employees are accustomed to working hard and making decisions quickly. Employees must be able to adjust to the rapid changes occurring in the technology industry, and twenty-hour days are not unusual. Rollerblading is enjoyed at the company, and bronco rides and inflatable slides have provided entertainment at parties. Human diversity in the workforce is valued at the company, which has a strong belief that an organization with human diversity is better able to meet the major business challenges of the twenty–first century. Project DIVA (Diversity Involves Valuing All) is an outreach program designed to achieve cultural diversity at all levels within the company.

SOURCES OF INFORMATION

Bibliography

"frequently asked questions about the netscape educational and nonprofit program." netscape communications corporation home page, 20 april 1997. available at: http://home.netscape.com/comprod/sales/educhar_faq.html#1/.

hof, robert d. "netspeed at netscape." business week, 10 february 1997.

holzinger, albert g. "netscape founder points, and it clicks." nation's business, january 1996.

kaplan, david. "nothing but net." newsweek, 25 december 1995.

"netscape communications corporation's company backgrounder." netscape communications corporation home page, 1998. available at http://home.netscape.com/company/about/backgrounder.html.

netscape communications corporation home page, 20 april 1997. available at http://www.sec.gov/archives/edgar/data/944458/0000912057-96-027513.txt/.

"a new electronic messiah." the economist, 5 august 1995.

rosenfield, david. "netscape comm." value line investment survey, 7 march 1997.

talbott, shannon. "creative staffing drives success." personnel journal, 9 march 1996.

tetzeli, rick, and shaifali puri. "what it's really like to be marc andreessen." fortune, 9 december 1996.