At their annual meeting, jittery shareholders of Netscape Communications have looked for assurance that the company's new focus on enterprise software and selling ads from its Netcenter Web site can return the beleaguered browser maker to profit.
"Every morning I wake up filled with anxiety and wariness," said Robert Dalziel, a retired stockholder from San Francisco, who has watched the value of his Netscape shares slide from around US$60 18 months ago to about $25 today. "Is there anything you can say that would make me want to go out and buy a few more thousand shares?"
Jim Barksdale, Netscape's president and chief executive officer, responded that the company is successfully making the transition from selling browser software to its new business. The company's for-profit Web site, Netcenter, will be better than any other Internet portal, he said, and a new advertising campaign launched today will boost Netscape's image as a premier provider of enterprise software.
But Barksdale promised no easy road to recovery.
"Netscape's stock has been volatile historically, and I believe it will continue to be volatile," Barksdale said.
In its salad days Netscape soared to profit through the sale of its popular Navigator Web browser. But aggressive competition from Microsoft forced the company to give away the software for free and look elsewhere for its revenues.
Netscape now views itself as having two distinct businesses, Barksdale said: selling the enterprise software and services that connect large corporations to the Internet, and selling advertising on its new Netcenter Web site. He rebuffed rumors that the company may split itself into two parts to address those markets separately.
Shareholders were shown a prototype of a revamped Netcenter Web site due to be unveiled in the next 30 days. The site includes links to various content providers, and has a customisable tool bar across the top which links users to free email, a worldwide directory service, news and messaging services.
"The number of channels will be dramatically increased, and the site will focus on personal services that are important to attracting and keeping customers," Barksdale said.
Netcenter generated about 25% of the company's revenues in the last fiscal quarter, with the remainder coming from its enterprise software business. Barksdale said after the meeting that he does not see that revenue mix changing in the near future.
Barksdale and Peter Currie, Netscape's chief administrative officer, outlined some of the challenges that face the company's enterprise software division.
"The sales and marketing challenges of selling million-dollar complex applications to CIOs (chief information officers) are different from selling shrink-wrapped software to departmental middle managers," Currie said. For that reason the company has combined its marketing and product development divisions in order to better deliver the message of the software's technical strengths, he said.
The company also must shed its image as a consumer software provider and reposition itself as a leader in the enterprise software market, Barksdale told the shareholders.
"Everyone likes to focus on the blood sport of the browser war (with Microsoft) and the whole David and Goliath thing," Barksdale said. "That does hurt us to some extent when we go after corporate accounts; it affects our credibility."
Microsoft has thwarted the company's growth and stifled innovation in the software industry, Barksdale said, but maintained that the companies are in dialogue over encryption export laws and through various Internet standards bodies.
Netscape on Tuesday beat analysts expectations by breaking even in its second quarter of fiscal 1998, which ended April 30. That, combined with the reassurance from Netscape's senior executives, appeared to have quelled the concerns of a few shareholders interviewed after the meeting.
Even shareholder Dalziel said he left the meeting with a "a gut feeling" that the value of his shares is going to improve. "I may even buy some more," he said.
A preliminary count of the proxy votes received before today's shareholder meeting appeared to affirm that optimism, as shareholders voted to reelect to the company's board Barksdale and John Doerr, a general partner of the venture capital firm Kleiner Perkins Caufield & Byers.
In other business, investors approved amendments to the company's director and employee stock option plans, and ratified Ernst & Young as the company's auditors for fiscal year 1998.
Netscape, based in Mountain View, California, can be reached on the World Wide Web at http://www.netscape.com/.