America Online, Inc. to Acquire Netscape Communications
in Stock Transaction Valued at $4.2 Billion.
DULLES, VA and PALO ALTO, Calif. - November 24, 1998 -- America Online, Inc.
(NYSE: AOL), the world's leading provider of branded interactive services, and Sun
Microsystems, Inc. (NASDAQ: SUNW), a leader in network computing products and services,
today announced that they have entered into a strategic allianceto accelerate the
growth of enterprise-class e-commerce, and to use Sun's JavaTM technology to develop
selected Internet devices that will help Internet users access America Online brands
from anywhere, anytime.
The alliance follows America Online's separate announcement today that it will acquire
Netscape Communications Corporation.
Under their definitive three-year development and marketing agreements, America
Online and Sun will work together to develop the most comprehensive suite of easy-to-deploy,
end-to-end solutions to help companies and Internet service providers rapidly enter
the e-commerce market and scale their e- commerce operations. Sun will become a
lead systems and service provider to America Online, with America Online committed
to purchase systems and services worth $500 million at list price from Sun through
2002 for its e-commerce partners and its own use.
America Online will receive more than $350 million in licensing, marketingand advertising
fees from Sun, plus significant minimum revenue commitments, over the next three
years.
Steve Case, Chairman and Chief Executive Office of America Online, said: "The
development of e-commerce is entering an exciting new stage. Increasingly, companies
are seeing the power of the Internet as central to their business strategies and
consumers are seeing the convenience of online commerce as central to their lives.
We are confident that working with Sun will make it much easier and faster for us
to help companies set up shop online, as well as to rapidly build their e-commerce
businesses."
Mr. Case added: "By acquiring Netscape and working with Sun to provide winning
e-commerce solutions, we will be able to both broaden and deepen our relationships
with business partners who need this additional level of infrastructure support,
and to provide more value and convenience for Internet consumers. We share with
Sun a vision for the future in which consumers will be able to access America Online
brands anywhere, at any time, and from any device, and we believe that with this
alliance, we can make this happen more quickly."
Scott McNealy, President, CEO and Chairman of Sun Microsystems, said: "As we
rapidly move towards the networked age, major corporations are turning to Sun to
provide the equivalent of 'dial tone' in their computing networks. Internet commerce
requires continuous operation, infinite scalability yet consumer-friendly ease-of-use.
By combining the strengths of Sun with AOLand its brands, we can lead our customers
into the electronic commerce marketplace of the future - into the networked age."
Complementary E-Commerce Strengths
The companies said that their strategic alliance will take advantage of the complementary
strengths of America Online, Sun and Netscape. These include America Online's success
as an Internet service provider and its industry- leading consumer reach, Sun's
expertise and global reach as an enterprise software and network computing leader,
and Netscape's suite of e-commerce software and services. Together, the companies
will be able to offer complete turnkey solutions along with modular software flexibility
and consulting services to enable e-commerce partners to put their businesses online
quickly and scale rapidly to meet consumer demand.
The new offerings will allow customers to completely outsource their electronic
commerce operations, with America Online providing everything from Internet traffic
and application connectivity to online marketing, orders, billing and payments.
Sun and America Online will also market their e- commerce solutions to customers,
including other Internet service providers, who want to create part of the solution
themselves. The products will be available on Sun's Solaris operating environment
as well as on other operating systems.
Sun will initially be able to sell AOL's Netscape-branded suite of middleware software,
with both companies using each other's sales channels and customer relationships
to market their existing products and services. As new products are developed, both
companies will sell the next-generation e-commerce solutions. Sun's large sales
and service organization will provide technical support for these products and services.
Ed Zander, Sun's Chief Operating Officer, said: "Sun's focus on developing
scalable, carrier-grade network services is now greatly enhanced. Today's announcements
with America Online further establishes Sun as the partner of choice to meet the
needs of both service providers and major organizations worldwide. We are demonstrating
the value of Sun's Java and JiniTM technologies and how they will enhance new world
commerce."
Included in the alliance is a commitment by Sun and America Online to develop the
next generation Netscape Navigator and Communicator software clients. In addition,
America Online will support the Java technology from Sun in its e- commerce solutions,
including the soon-to-ship version 1.2 as well as PersonalJavaTM.
A major focus of the alliance will be to utilize PersonalJava to offer America Online
services across a range of next generation Internet devices, consistent with its
"AOL Anywhere" strategy to extend its brand to all emerging mass- market
platforms. PersonalJava is specifically designed for small, nomadic devices such
as a personal digital assistant, cell phone or pager. This will further establish
the Java platform as a leading software environment for these emerging Internet-based
personal and business tools.
America Online plans to support multiple technologies in its e-commerce solutions
and to support multiple platforms in the development of next- generation Internet
devices.
About America Online
America Online, Inc., based in Dulles, Virginia, is the world's leader in branded
interactive services and content. America Online, Inc. operates two worldwide Internet
online services: America Online, with more than 14 million members; and CompuServe,
with approximately 2 million members. America Online, Inc. also operates AOL Studios,
a leading builder of Internet brands for new market segments. Other branded Internet
services operated by America Online, Inc. include AOL.COM, the world's most accessed
Web site from home; Digital City, Inc., the No. 1 branded local content network
and community guide on AOL and the Internet; AOL NetFind, AOL's comprehensive guide
to the Internet; AOL Instant Messenger, an instant messaging tool available on both
AOL and the Internet; and ICQ, an instant communication and chat technology on the
Internet.
This release contains forward-looking statements within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
The forward-looking statements are based on management's current expectations or
beliefs as well as on a number of assumptions about future events, and are subject
to factors and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. The reader is cautioned
not to put undue reliance on forward-looking statements, which are not a guarantee
of future performance and are subject to a number of uncertainties and other factors,
many outside America Online's control. The forward-looking statements in this release
address subjects including the expected date of closing the acquisition, future
financial and operating results, growth of the Company's audience, growth of the
online commerce industry, and the development and success of new online commerce
technology and platforms.
The following factors, among others, could cause actual results to differ materially
from those described in the forward-looking statements: the risk that the Netscape
business will not be integrated successfully into the Company's business; costs
related to the merger; inability to obtain approval of Netscape stockholders; inability
to obtain, or meet conditions imposed for, governmental approvals for the merger;
increased competition and its effects on pricing, spending, third-party relationships,
the subscriber base and revenues; reliance on network service providers; inability
to identify, develop and achieve commercial success for new products and services
and access and distribution technologies pursuant to the development and marketing
agreements with Sun; risks of new and changing regulation in the U.S. and internationally.
For a detailed discussion of these and other cautionary statements, please refer
to the Company's filings with the Securities and Exchange Commission, especially
in the Forward-Looking Statements section of the Management's Discussion and Analysis
section of the Company's Form 10-K for the fiscal year ended June 30, 1998 and in
the 10-Q for the quarter ended September 30, 1998, and in the Risk Factors section
of the Company's most recently filed registration statement on Form S-3 filed in
June 1998.
Netscape and the Netscape N Logo are registered trademarks
of Netscape Communications Corporation in the United States and other countries.
Other Netscape logos, product names, and service names, including Netcenter, Smart
Browsing, Netscape Contact, Mozilla, and Netscape Open Directory are also trademarks
of Netscape Communications Corporation. Other product and brand names are trademarks
of their respective owners.
About Sun Microsystems, Inc.
Since its inception in 1982, a singular vision, "The Network Is The ComputerTM,"
has propelled Sun Microsystems, Inc. (NASDAQ: SUNW), to its position as a leading
provider of high quality hardware, software and services for establishing enterprise-wide
intranets and expanding the power of the Internet. With more than $10 billion in
annual revenues, Sun can be found in more than 150 countries and on the World Wide
Web at http://sun.com.
Sun, Sun Microsystems, the Sun logo, Java, Jini and "The Network Is The Computer"
are trademarks or registered trademarks of Sun Microsystems, Inc in the United States
and other countries.
1 - Acquisition To Significantly Advance AOL's Multiple
Brand Strategy, Broaden Audience, and Take E-Commerce to New Level.
2 - AOL To Operate Most Popular and Diverse Family
of Brands in Cyberspace.
3- AOL and Sun
Microsystems, Inc. to Develop Next Generation of E-Commerce Solutions and Internet
Devices.
DULLES, VA, November 24, 1998 -- America Online, Inc. (NYSE: AOL) today announced
that it will acquire Netscape Communications Corporation (NASDAQ: NSCP) in a transaction
that will extend America Online's leadership in interactive services.
The stock-for-stock, pooling-of-interests transaction, in which stockholders of
Netscape will receive 0.45 shares of AOL common stock for each share of Netscape
common stock, is valued at $4.2 billion. It is expected to close in the spring of
1999, subject to various conditions including customary regulatory approvals and
approval by Netscape's shareholders. The Company said it expects the transaction
will be slightly accretive to operating results. Netscape's operations will remain
based in Mountain View, CA.
Key benefits of the acquisition will be to:
Advance America Online's multiple-brand strategy with one of the Internet's best
known brands;
Substantially broaden America Online's global audience at home and at work, by adding
the fast-growing Netscape Netcenter portal that is integrated with the Netscape
browser used by millions of people;
Accelerate the growth of e-commerce across the America Online and Netscape brands
and provide added value to their business partners;
Provide significant new opportunities to make America Online's brands available
anywhere to interactive consumers, as well as to maximize the value of these brands,
by taking advantage of AOL's existing shared infrastructure; and
Expand the range of America Online products and services by adding world-class technology
and an experienced development team that has demonstrated its ability to innovate
rapidly.
Separately, America Online announced that it has entered into a strategic development
and marketing alliance with Sun Microsystems, Inc. to enhance its delivery of e-commerce
solutions that will help build revenues across America Online and Netscape brands,
and offer added value to both America Online and Netscape business partners, as
well as the growing number of major corporations planning to put their business
on the Internet. The companies will develop easy-to-deploy, end-to-end solutions
for e-commerce based on the best available technologies and expand their sales channels
to include each other's products and services.
The three-year America Online-Sun agreements also will increase distribution and
development of Netscape's enterprise software for corporate customers. The companies
also will use Sun's Java technology to offer AOL services on selected Internet devices,
consistent with AOL's "AOL Anywhere" strategy to extend its brand to all
emerging mass market platforms. (See separate America Online-Sun Microsystems release.)
Most Popular and Diverse Family of Brands in Cyberspace
With Netscape joining its AOL, CompuServe, AOL.COM, AOL Instant Messenger, ICQ,
and Digital City brands, America Online will operate the most popular and diverse
family of brands in cyberspace.
Steve Case, Chairman and Chief Executive Officer of America Online, said: "The
acquisition of Netscape is a big step forward for America Online that will greatly
accelerate our business momentum. Netscape has played a key role in helping consumers
benefit from the enormous power of the Internet, and we share the same mission.
With Netscape, we will broaden our global audience at home and at work, and add
world-class technology to support an expanded range of America Online interactive
products and services."
Mr. Case added: "The development of e-commerce is entering an exciting new
stage. Increasingly, companies are seeing the power of the Internet as central to
their business strategies and consumers are seeing the convenience of online shopping
as central to their lives. Netscape's highly regarded suite of e-commerce software,
coupled with our strategic alliance with Sun, will help us drive e-commerce to a
whole new level that will benefit both business partners and Internet consumers."
Mr. Case continued: "We have been very impressed with how quickly Netscape
has transformed its business -- shifting its focus away from browsers and platforms
and toward high-growth portal and e-commerce opportunities. We look forward to welcoming
the Netscape team to our America Online family. Having known each other for many
years, we know that together we can take the Internet to the next stage of its development.
And as interactive services become more central to the daily lives of tens of millions
of people, the promise of e-commerce becomes even more of a reality for consumers
and businesses."
Mr. Case concluded: "One key to this acquisition is the flexibility that it
gives us. ICQ, our instant communications and chat portal, will promote the downloading
and registration of the Netscape client software to its large and rapidly growing
international community. We also expect to maintain our working relationship with
Microsoft, continuing to include Internet Explorer in the AOL service so consumers
will continue to have AOL software included on the Windows desktop."
Bob Pittman, President and Chief Operating Officer of America Online, said: "Netscape
has always been one of the best-known and most highly renowned Internet brands.
Over the past year, Netscape has extended that brand into the portal space with
Netscape Netcenter, and developed a truly differentiated portal by building useful
links between the service and the Netscape client software and Netscape's enterprise
business. Although Netscape Netcenter is already one of the fastest-growing portals,
we believe our existing shared infrastructure will enable us to efficiently expand
its audience and build its revenue streams. With AOL, CompuServe, ICQ, Digital City
and now Netscape Netcenter, we will offer an unparalleled array of interactive services
to the full spectrum of Internet consumers as well as to our commerce and content
partners."
Mr. Pittman added: "America Online has made great progress over the past few
years in taking e-commerce from promise to reality, but we've only scratched the
surface in reaching its full potential. Our acquisition of Netscape and the alliance
with Sun will allow us to accelerate our e-commerce efforts. We will add complementary,
best of breed tools and platforms to speed the time to market for companies now
wanting to enter e-commerce, as well as for those ready to scale their businesses
further. This will be of enormous value to both America Online and Netscape commerce
partners Ð both business-to-business and business-to-consumers Ð and provide
even more convenience for Internet shoppers."
The Company said Jim Barksdale, President and Chief Executive Officer of Netscape,
will be joining America Online's Board of Directors after the transaction closes.
Mr. Barksdale said: "America Online and Netscape share a common vision - to
offer solutions that make it simple for businesses and consumers to participate
fully in the Net Economy. The companies' complementary strengths promise to accelerate
the adoption of e-commerce and Internet applications worldwide. This exciting partnership
enables us to deliver even better and more complete products and services to both
existing and new customers."
Netscape Brand Synonymous With Internet
The Netscape brand is virtually synonymous with the Internet, including such
widely used products as Netscape's browser, Netscape Netcenter, and Netscape's suite
of enterprise and e-commerce applications and software. America Online will be able
to efficiently speed the development of Netscape's products and services with its
shared infrastructure, current advertising and commerce relationships, and ability
to drive traffic from its other brands. In addition, the Netscape portal will offer
connections to other America Online brands to maximize utility for customers and
its value to the Company.
Launched in June, Netscape Netcenter is one of the Internet's fastest growing portals
worldwide in registrations, traffic and software downloads. Netscape Netcenter now
has more than 9 million registered members. Since June, daily traffic has increased
by 50%. In the most recent quarter, worldwide downloads exceeded 24 million, fueled
in part by the release of both new beta and final versions of its browser software.
In addition, Netscape has announced plans to enhance Netscape Netcenter with the
recent acquisitions of AtWeb Inc., to link more than 600,000 small-business Web
sites to the portal, and NewHoo! Community Directory Project to provide comprehensive
Internet directory service. Netscape also has introduced the "Netscape TuneUp
for IE," a free software add-on to Microsoft Internet Explorer that integrates
Netscape's popular Smart Browsing services while providing access to Netscape Netcenter
services.
Netscape has transformed itself over the past year into a successful portal and
enterprise/e-commerce software business. The Company currently offers a full suite
of packaged applications for business-to-business and business-to-consumer Internet
commerce, and award-winning Internet server software for building and hosting a
variety of Internet applications. Netscape's corporate customers using the Company's
e-commerce and infrastructure software suite include Ford, Lucent Technologies,
Bell Canada, France Telecom, John Hancock and the US Department of Defense.
In July, Netscape introduced its newest browser, Communicator 4.5, designed to link
Netscape Netcenter's content and services with the browser's ease-of-use advances
Ð making it simpler for people to find what they want on the Internet and creating
a persistent relationship with users that helps generate higher usage levels. This
month, Netscape is introducing the Custom Portal to bring the power of consumer
portals to business and government audiences, including Internet service providers
and computer manufacturers. As part of its effort to drive more traffic to Netscape
Netcenter, America Online said it plans to continue to develop the Communicator
and pursue new distribution channels.
Unique Technology Solutions for E-Commerce Partners
The Company said its strategic alliance with Sun Microsystems will bring together
America Online's industry-leading consumer reach, Sun's e-commerce hardware and
operating system platforms, and Netscape's complementary suite of e-commerce software.
Together, the companies will be able to offer complete turnkey solutions along with
modular software and consulting services to enable e-commerce partners to put their
businesses online fast and scale quickly to meet consumer demand.
"The interactive marketplace is changing quickly, and it is clear that America
Online is a leader in driving e-commerce forward," said Scott McNealy, President,
CEO and Chairman of Sun Microsystems. "We are incredibly excited about the
opportunity to work closely with the world's leading provider of branded interactive
services and to integrate our full-range of products and services into the most
comprehensive turnkey e-commerce solutions."
Under the America Online-Sun alliance, both companies will sell products and services
through each other's sales channels and customer relationships to market their existing
products and services, as well as their new e-commerce solutions. Sun's large sales
and service organizations will provide technical support for these products and
services. The alliance also will bring new development and distribution opportunities
for Netscape's software and applications.
@Macarlo, Inc.
@Macarlo's Shareware & Web
OS/2
Java Lobby Member
Java Site Accredited
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