STOCKREPORTS

Netscape Communications Corporation

Nasdaq Symbol NSCP

Recent Price 44.81 52 Wk Range 60.50 - 25.31

Yield Nil 12-Mo. P/E NM

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) NA Fair Value NA Risk HIGH Earn/Div Rank NR
Technical Evaluation: BULLISH since 07/97 Rel. Strength Rank (1 Lowest - 99 Highest) 96 Insider Activity Neutral

Overview 09-MAY-97

Revenues in 1997 are expected to grow at a high double-digit rate, led by the widespread acceptance of the company's client browser software for surfing the Internet, as well as server software for operating server sites on the Internet. A significant portion of the company's sales growth should come from server software used by companies that want Internet technology on in-house computer networks, or Intranets. Service revenues should also continue to advance, as NSCP aids its clients in building company-wide internal networks. Margins are expected to widen on the sharply higher volume, although the company will continue to make significant investments in both sales and marketing and research and development. The company should earn about $0.50 a share in 1997. Netscape has formed a number of joint ventures and made several strategic acquisitions that will allow it to expand its breadth of offerings and acquire technologies in complementary areas.

Valuation 09-MAY-97

The shares of this rapidly growing company have fallen over 40% since the beginning of 1997. Netscape has a dominant position in both of its markets. Navigator is currently the most popular Internet browser, and the company's server software is used by a significant majority of the largest U.S. concerns. While its product positioning is solid, the company is facing stiff competition from Microsoft and a host of other software makers, especially in the server market. The shares trade at over 60X our 1997 earnings estimate, which is not an excessive valuation considering Netscape's growth prospects. However, in light of competitive uncertainties, we expect the shares will only perform in line with the market in coming months.

Key Stock Statistics

Fiscal Year Ending Dec. 31

Dividend Data: No cash dividends have been paid. The company intends to retain its earnings for use in the expansion and operation of its business and does not anticipate paying cash dividends in the foreseeable future. A two-for-one split was effected on February 6, 1996.

Business Summary 09-MAY-97

Netscape Communications Corp. is a leading provider of open client and server software, commercial applications, and development tools that link people and information over the Internet and private transmission control protocol (TCP/IP) networks or Intranets. Its products allow individuals and organizations to execute transactions across the Internet, such as the buying and selling of information, software, merchandise and publications.

Client software includes its Netscape Navigator software and a product bundle of add-on features that allow users to easily exchange information and conduct commerce on the Internet. In 1996, Navigator and related client products accounted for 57% of total revenues.

NSCP server products combine encryption features, intuitive graphical administration, high performance, and adherence to standards to enable electronic commerce and communications over the Internet and Intranets. The products can be used independently for implementing and operating Web server sites, e-mail or newsgroups, or can be integrated to provide a seamless, high performance TCP/IP-based communication solution, and to provide a platform to create next-generation, live, online applications. Server software products include the Netscape SuiteSpot, the Netscape Enterprise Server, the Netscape Messaging Server, the Netscape Directory Server, the Netscape Proxy Server, the Netscape FastTrack Server and the Netscape Catalog Server.

NSCP's commercial applications are designed to enable organizations to conduct electronic commerce on the Internet. The company's commercial application product line includes the Netscape Merchant System, which allows users to create and manage virtual storefronts; the Netscape Publishing System, designed for users who want to create subscription-based online publications; and the Netscape Commerce Platform, which allows developers and businesses to create a customized commerce environment. In 1996, server and commercial applications accounted for 27% of total revenues.

Important Developments

Jan. '97 Netscape announced that it delivered over 1 million servers in 1996.
Nov. '96 In a public offering, 5.6 million NSCP common shares (including 3.0 million for existing shareholders) were sold at $53.75 each. Company proceeds will be used for general corporate purposes. Separately, Hewlett-Packard agreed to become the first worldwide support provider for Netscape's products.
Oct. '96 Netscape and software provider Oracle Corp. signed agreements to integrate, market and distribute each others' products.

Capitalization

Long Term Debt: $484,000 (3/97).
Options: To purchase 8,825,805 shs. at $0.056 to $82.12 ea. (12/96).

Curr. Ratio	2.4	3.4	1.4	NA	NA	NA	NA	NA	NA	NA
% LT Debt of Cap.	0.1	0.1	3.7	NA	NA	NA	NA	NA	NA	NA
% Net Inc.of Revs.	6.0	NM	NM	NA	NA	NA	NA	NA	NA	NA
% Ret. on Assets	5.4	NM	NA	NA	NA	NA	NA	NA	NA	NA
% Ret. on Equity	7.4	NM	NA	NA	NA	NA	NA	NA	NA	NA

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--501 E. Middlefield Rd., Mountain View, CA 94043. Tel--(415) 254-1900. Website--http://home.netscape.com Chrmn--J. H. Clark. Pres & CEO--J. L. Barksdale. VP & CFO--P. L. S. Currie. VP & Secy--R. R. Katz. Dirs--M. L. Andreessen, J. L. Barksdale, E. A. Benhamou, J. H. Clark, L. J. Doerr, J. E. Warnock. Transfer Agent & Registrar--The First National Bank of Boston. Incorporated--in Delaware in 1994. Empl-- 1,811. S&P Analyst: Peter C. Wood, CFA

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997