Netscape Communications Corp. reported a tumble in fourth-quarter revenues from its Web site. But the ailing software company attributed the decline from the third quarter to a shift to revenue-sharing deals with partners that will benefit results in coming quarters.
Netscape said its site last quarter brought in $21 million in ad sales, transaction deals and revenue sharing. The site generated revenues of $20 million, $25 million and $27 million in the first three quarters.
The site is critical: Netscape last quarter generated more revenue from its site than from sales of its stand-alone Web browsers, for which revenues plummeted to $12 million in the fourth quarter from $27 million in the previous quarter.
Browser revenues will collapse with Netscape's decision last month to make its browser free. So Netscape now must rely on corporate software, services and the Web site for revenues and profits.
A Netscape spokeswoman attributed the decline in Web site revenues to a shift to longer-term revenue-sharing deals. In these deals, Netscape takes less upfront money from a partner or sponsor but shares in ongoing revenues, such as transaction sales.
REVENUES DOUBLED FROM '96
"Definitely, the Web business remains strong," she said, noting fourth-quarter Web site revenues more than doubled from $9 million in the final quarter of 1996.
Media Metrix last week reported Netscape's site ranked No. 1 for 1997 in Web traffic among business users.
Still, the decline in Web revenues came during a wrenching quarter in which Netscape announced a loss, layoffs and a reorganization. Netscape revenues last quarter of $125.3 million grew 9% from the same quarter a year earlier, but fell 17% from the third quarter. Netscape lost $88.3 million last quarter.
For the year, Netscape posted revenues of $533.9 million, up 54%, on a loss of $115.5 million, compared to '96 earnings of $24.4 million.
Copyright January 1998, Crain Communications Inc.