Netscape envisions lengthy takeover process By Ben Elgin, Sm@rt Reseller January 12, 1999 3:18 PM ET Thanks to its impact on Microsoft Corp.'s ongoing case with the U.S. Department of Justice, the three-way deal involving Netscape Communications Corp., America Online Inc. and Sun Microsystems Inc. may not come to fruition until March or April. For Sun (SUNW) and Netscape (NSCP) resellers seeking direction in the channel, this is bad news. All three deal participants refuse to discuss specifics until AOL's pending $4.2 billion acquisition of Netscape earns approval from federal regulators. As part of the deal, Sun is expected to sell and support Netscape's server software. The delay means VARs will remain in the dark for several more months on critical issues, such as the converging Sun and Netscape channel programs and the two vendors' overlapping product lines. Speaking on Tuesday to a group of reporters in Bonn, Germany, Netscape Vice President Barry Ariko said that the three-way deal probably would not close until late March or late April, according to published reports. He also said that AOL's goal of a February close date was not very likely. The reason for the delay? Microsoft's ongoing litigation with the DOJ. While Ariko, according to the published reports, expressed confidence that nothing would stand in the deal's way, he is expecting a longer review process in light of the Microsoft case. Separately, Sm@rt Reseller has learned that Sun -- which is slated to license Netscape's enterprise software for three years -- could very well walk away from the deal with the Netscape product line in tow. Indeed, the pending licensing and co-development deal between Sun and AOL (AOL) gives Sun access to source code for most, if not all, of Netscape's products. According to an industry analyst briefed by executives from the three companies, nothing will prevent Sun from toting away the recipe to those products when its three-year deal expires. "Three years from now, Sun will end up owning all of Netscape's enterprise software," said Bob Chatham, senior analyst with Forrester Research Inc. In essence, the pending three-way agreement could boil down to what the deal likely would have been had tax-break considerations not interfered: AOL buying Netscape's portal and Sun buying Netscape's high-end software. "AOL people are painting this as a seamless, end-to-end e-commerce deal... But AOL bought Netscape for its portal. It just happened to come with all of this other stuff," said Chatham. Indeed, Chatham is not alone. Other analysts doubt AOL will ever touch the enterprise software division, beyond merely internalizing some of the technology. "AOL is not going to get into the enterprise server software business. How they resolve the [Netscape] channel issue will be interesting," said Zona Research Inc. industry analyst Jim Balderston. Officials from AOL, Sun and Netscape all declined to comment on the source-code agreements. From MAILER-DAEMON@cs.depaul.edu Wed Jan 13 10:13:05 1999