SAN FRANCISCO, February 5: Shares of Netscape Communications Corp jumped on renewed market rumours that the Internet software maker would be acquired by computer workstation power Sun Microsystems Inc.Analysts said rumours have been recurring in recent weeks, as Netscape's share price has dropped in recent months. Last month, Netscape reported a loss in the fourth quarter and layoffs of about 400 staffers, its first since its inception.
Netscape stock closed up $1.06 at $19.25 in active trading on Nasdaq. Officials at Netscape in Mountain View, California, did not immediately return calls. Sun stock rose 37.5 cents to $49, also on Nasdaq.
Tuesday, Charles Payne at Wall Street Strategies, a small firm that trades takeover stocks, issued an afternoon update saying that a Sun purchase of Netscape was a rumour floating in the market.
"Good fit, probably happens," Payne wrote in a report. But some analysts who follow Sun said such an acquisition by Sun, while seemingly a good strategic fit on the surface,was not likely to happen.
"They have some further structural issues ahead of them,"Russell Crabs, a SoundView financial analyst, said. "I think there are enough operational issues at Netscape that a company like Sun wouldn't want to take them on.""There is a major change going on in their economic business model," Crabs said, referring to Netscape's recent announcement that it will give away its Navigator and Communicator browser software for free and make its source code available on the Internet to software developers.
A spokeswoman for Palo Alto, California-based Sun said that as acompany policy Sun does not comment on rumours and innuendo.
Analysts said rumours that Netscape was being looked at by a slew of companies, ranging from Sun, database software maker Oracle Corp and computer giant Internationa l Business Machines Corp, to network software company Novell Inc, have been off and on for at least a year.
"Who knows, these rumours have been going around for months,"Mary McCaffrey, a BTAlex. Brown analyst, said. "Is it a possibility?
"Anything is possible. Compaq (Corp.) just bought DEC," she said, referring to the recent landmark acquisition of Digital Equipment Corp by the world's No. 1 personal computer maker.
One fund manager said he has heard rumours about Sun and Netscape in the past two days but nothing has been confirmed.
"Sun has picked up some very, very cheap assets in order to pump up its own ROI (return on investment), but it has not been in the rescue mode for the sake of rescuing," Daniel Kunstler of JP Morgan & Co Inc, said.
Netscape is battling to keep software superpower Microsoft Corp, regarded as a foe by Sun chairman Scott McNealy, from dominating the Internet with its browser and other technologies.
"Can Sun stand a situation where Microsoft has complete control of the browser? In order to make sure there is a viable Netscape, they might do it for that," Kunstler said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
