• Recommend:
• 0 Comments

AOL and Netscape Confirm Purchase Talks

Proposed deal could bring giant online service its own browser plus the Netcenter portal.

By Tom Spring, PCWorld   

AOL is in talks with Netscape, an early Internet pioneer, to acquire the firm in an all-stock transaction valued at around $4 billion. AOL also said it is in talks with Sun Microsystems for possible "development and marketing agreement for e-commerce and new Internet devices" based on Netscape products.

These negotiations still could fail, the companies emphasized. "There can be no assurance that an agreement will be reached or a transaction consummated," AOL cautioned in a statement.

Under one scenario being discussed, AOL would take control of Netscape's popular Netcenter portal, which receives an estimated 20 million visitors monthly, and distribute the company's browser software. Sun Microsystems potentially could benefit by taking control of Netscape's server software or by easy distribution of its Java products among AOL's 14 million subscribers. Private talks between the three have reportedly been underway for the past two weeks.

Analysts say the combination of AOL and Netscape could compete well against Microsoft's attempts to grow its MSN network.

"Never discount Microsoft, but a Netscape-AOL partnership would be a tough force for Microsoft to reckon with," said Melissa Bane, an analyst with the Yankee Group.

If the deal succeeds, it would undermine the government's antitrust case against Microsoft taking place in Washington this week, commented Tim Sloane, an analyst with the Aberdeen Group. According to Sloane, a deal brokered between Netscape, AOL, and Sun Microsystems would bolster Microsoft's argument that a competitive marketplace mandates vigorous competition.