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February 1, 1996

Netscape Announces Strong Earnings and an Acquisition

By LAWRENCE M. FISHER

SAN FRANCISCO -- Buoyed by growing demand for its Internet software, Netscape Communications Inc. reported fourth-quarter earnings that exceeded Wall Street analysts' estimates.

Separately, Netscape said it had acquired Insoft Inc., a privately held company, in a stock swap valued at about $157 million. Insoft makes software for collaborating over networks, including the use of audio and video. As part of the deal, Netscape announced an agreement with 10 other Internet technology companies to create a standard for audio and video over the Internet.

Netscape announced its results after the market's close, but its shares fell both before and after the close, after a big jump on Tuesday. Netscape finished at $164.25, down $2.75, in NASDAQ trading, and dropped to $159 in after hours trading.

Some analysts predicted the stock would open higher Thursday after investors got a chance to review the company's performance. Netscape shares are scheduled to split next week.

"It was clearly a great quarter; the numbers are going up and the outlook is healthier than ever," said J. Neil Weintraut, an analyst with Hambrecht & Quist.

Although Netscape is best known for its Navigator browser for the World Wide Web, "the market for Web technology is bigger than the Internet," Weintraut said. More than half of Netscape's revenues comes from corporations' using its products to automate internally. "It's accessing a lot of internal information with self-help applications," he said.

For the quarter, Netscape had earnings of $2.4 million, or 6 cents a share, in contrast to a loss of $7.5 million in the comparable period a year ago. Revenues were $40.6 million, up from $1.2 million in the fourth quarter of 1994.

"It was a big, big quarter for us across all channels, all products and all regions," said Jim Barksdale, Netscape's president and chief executive. "Our strong results reflect the continued demand around the world for open software products that link people and information over networks."

For the year, Netscape reported a loss of $3.4 million, down from a loss of $11.9 million the previous year. Revenues rose to $80.7 million from $1.4 million in 1994.

Operating results for the year include a one-time charge of $2 million related to the acquisition of Collabra Software Inc., which closed in the fourth quarter.


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