The Cutting Edge: COMPUTING / TECHNOLOGY / INNOVATION : Netscape Will Come to Market
Netscape Communications Corp., one of the companies credited with turning the Internet into a zippy, picture-filled ride, is coming to market, and investors can’t wait.
The 17-month-old Silicon Valley software company plans to raise $41.6 million by selling 3.5 million shares at $13 each in August. Netscape’s best-known software product, the Navigator browser, helps people find their way around the Internet.
Mountain View, Calif.-based Netscape has a novel strategy for promoting its product: It gives it away. The company uses the browser to build a name for itself, in hopes of pulling in customers for its real moneymaker, server software.
The question is whether a company that dominates the browser market--about three-quarters of the Internet browsers are Netscape’s Navigator--can actually make money. Neither the browser nor server market is established, and there are plenty of contenders jockeying for the business.
As a software development company in the early stages of its commercial growth, Netscape is expected to lose money for at least another two years. The company reported a first-quarter loss of $2.7 million on revenue of $4.7 million.
“Netscape is unproven,” said Jim Breyer, general partner at San Francisco venture capital firm Accel Partners. “The Internet accelerates changes. It is hard to predict how this company will do in a year.”
Netscape made a name for itself by blanketing the emerging Internet market with its Navigator browser. The software, launched in December, lets people wander the Internet by pointing and clicking on colorful pictures and highlighted text instead of typing in arcane computer coding.
Netscape’s server software sets up “home pages” for companies. The home pages consist of pictures and text, serving as electronic storefronts for businesses. Netscape’s servers also contain software that scrambles credit card numbers for sending over the Internet so that crooks cannot steal them. Server software costs range from $800 to as much as $50,000 for custom models.
Netscape is using the momentum generated by its browser to sign licensing and collaborating agreements for its servers and browsers with Silicon Graphics Inc., Novell Inc., Digital Equipment Corp. and others.
