Netscape to slash workforce by 20%

Netscape Communications announced last week that it is expecting an $89 million loss for its fourth quarter and will layoff 20% of its workforce this quarter. The company cited competition from Microsoft Internet Explorer and longer sales cycles as the primary reasons for its loss. Netscape's Chief Financial Officer, Peter Currie, said that company will try to outsource several of its sales strategies and streamline its channel attack by focusing on only a few resellers.

CEO Jim Barksdale fueled rumors that Netscape would begin giving away Navigator, its Web browser, for free again when he said that a major announcement about Communicator and Navigator pricing would come within two weeks. Netscape scarffed up 85% of the Web browser market in a virtually competitor-less field when it gave away Navigator a few years ago. The company now charges $50-100 for the product, while Microsoft gives away IE for free. Over the past year, Microsoft has grabbed much of Netscape's share, as Navigator's presence has declined to less than 60%.

In the fourth quarter of 1996, sales of Navigator accounted for $50 million in revenues. Sales for the same quarter in 1997 are expected to run about $17 million, a dramatic drop. Server sales have also fallen in the same time period.

Netscape also indicated that future Communicator/Navigator releases wouldn't be as buggy as the current versions. Netscape VP Mike Homer says that "Mercury" and "Apollo"--the code-names of its upcoming client and server products--will focus on "quality rather than the introduction of new features." Communicator 4.0, which was initially released in mid-1996, has had numerous bug fixes, interim releases, and saw a major component of the suite--the little-loved Netcaster--ship months late.

Netscape's stock traded at $17 on Tuesday, a 52-week low. Details about the layoffs will become available after the company makes its quarterly report on January 27th

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