AOL buys Netscape, joins Sun in Java deal By Rebecca Sykes InfoWorld Electric Posted at 7:16 AM PT, Nov 24, 1998 America Online on Tuesday announced it will acquire Netscape in a stock-for-stock transaction worth $4.2 billion. AOL also announced a strategic alliance with Sun Microsystems, including plans to develop Internet devices using Sun's Java programming language. Under the terms of AOL's deal with Netscape, Netscape stockholders will receive 0.45 shares of AOL common stock for each share of Netscape stock, according to a statement from AOL. Jim Barksdale, Netscape's president and chief executive officer, will join AOL's board of directors after the deal closes, the statement said. Pending regulatory approval, the acquisition is expected to close in the second quarter next year, it said. AOL will continue to offer Microsoft's Internet Explorer to its AOL online customers, according to the statement. Netscape's Navigator browser is locked in battle with Explorer, and some observers had speculated that an AOL-Netscape deal could eject Explorer from AOL's offerings. AOL will also offer Netscape client software to its users, downloadable from the Web using AOL's ICQ instant messaging capability, according to AOL. AOL's deal with Sun, which is separate but related to its Netscape acquisition, encompasses a three-year development and marketing agreement, according to AOL. AOL and Sun together will develop the next version of Netscape's Navigator and Communicator software clients and AOL will use Java in its Internet-commerce offerings, the company said. AOL and Sun also will jointly develop a suite of easy-to-deploy software designed to help companies and Internet service providers engage in I-commerce, according to AOL. AOL will buy systems and services from Sun worth $500 million at list price through 2002, AOL said. For its part, AOL will receive more than $350 million in licensing, marketing, and advertising fees from Sun, AOL said. The deal could have far-reaching effects on the Department of Justice case against Microsoft, as well as changing the landscape of the browser wars. Netscape's exit with a bang would also likely impact the ongoing Department of Justice antitrust suit against Microsoft, which has looked at Microsoft's alleged efforts to drive Netscape out of business. Sources familiar with the deal reportedly said that AOL would now be in a position to get a huge amount of Internet commerce on the Web. In addition to its own 14 million subscribers, Netscape's Netcenter gets about 20 million visitors per month. Some analysts see AOL, strengthened by Netscape's technology and users, as a potential threat to Microsoft's growing I-commerce ventures. Other analysts were still sorting out the merits of the deal, however. "From a portal perspective it makes sense. Netscape could tap AOL's installed base, one of the largest on the Web," said Heather Ashton, an analyst at Hurwitz Group in Framingham, Mass. "But strategically, I'm not sure how much sense it makes. This could move attention away from Netscape's enterprise applications and servers to the portal side." Netscape Communications Corp., based in Mountain View, Calif., can be reached at www.netscape.com. America Online Inc., in Dulles, Va., can be reached at www.aol.com. Sun Microsystems Inc., in Palo Alto, Calif., can be reached at www.sun.com. Rebecca Sykes is a Boston correspondent for the IDG News Service, an InfoWorld affiliate. News Service correspondents Jana Sanchez-Klein and Scott Magoon, and InfoWorld Editor at Large Dana Gardner contributed to this report. From MAILER-DAEMON@cs.depaul.edu Tue Nov 24 10:42:41 1998