Wall Street Darling Stumbles Netscape Seeks Help To Continue Battle Against Microsoft

How far an Internet highflyer has fallen.

Not long ago, Netscape Communications Corp. was the darling of Wall Street and World Wide Web users. Its popular Web-browsing software, investors believed, finally might crack Microsoft Corp.’s lock on software for running personal computers.

Those dreams seemed shriveled by Thursday, with a report that Netscape was in talks with several big technology firms to sell all or part of itself. The companies declined to comment on the talks, which had been rumored for weeks, but the Wall Street Journal story sent Netscape stock soaring as much as 25 percent before easing somewhat.

It was a very different stock rally than the initial public offering that launched Netscape as a public company in August 1995 - giving the start-up a $2 billion market value even though it then had just $20 million in sales.

Investors this time around bought Netscape stock because of the prospect of a deep-pocketed parent coming to aid a company that apparently no longer wants to go it alone in its software fight against Microsoft.

Mike Homer, Netscape’s vice president of marketing, would say only that the company was in talks about alliances intended to widen distribution of its software, but declined to comment on whether investments or an outright purchase were on the table. He said Netscape has periodically talked with the companies, which are International Business Machines Corp., Sun Microsystems Inc., Oracle Corp. and America Online Inc.

Netscape, Sun, Oracle and IBM spokesmen declined comment.

Netscape isn’t alone in needing help.

Apple Computer tried to sell itself last year amid faltering demand for its once-pioneering computers in the face of less expensive machines running on Microsoft’s Windows operating program. Digital Equipment was bought by Compaq Computer last week after sales of its business machines were weakened by soaring demand for Windows desktops.

But Netscape’s fall seems particularly steep. At the time the company went public, its Navigator browser for finding and retrieving information on the Internet was a model for how software companies could cash in on the World Wide Web and defeat the Microsoft monolith.

Browsing programs promised to reduce the distinction between data that resides on an individual desktop computer and data retrieved through the Internet, a major change in how people work with their computers.

The day would come, some speculated, when computer users no longer would need a bulky operating program based in their desktop to perform such basic functions as word processing and communicating with other people using remote computers.

That’s when Microsoft struck back: It created its own Internet Explorer software in August 1995 and sunk huge chunks of its more than $2 billion annual research budget to come out with numerous updates, eventually surpassing Netscape’s Navigator in some Internet functions.

Moreover, Microsoft gave away its browser and also struck deals with all major personal computer makers to have them include its browser in their machines. In its next upgrade of Windows, due out next summer, Microsoft plans to fully integrate its browser into the desktop program.

In short, Microsoft took a key weapon from Netscape’s arsenal - people’s desire for quick and easy Internet access - and used it against its smaller rival.

The Justice Department has sued Microsoft over its aggressive marketing practices, but Netscape’s story is told in the numbers. Just two years ago, Netscape had three-quarters of the browser market vs. 3 percent for Microsoft, according to Zona Research Inc., a high-tech research firm. The latest figures show Netscape at 62 percent vs. Microsoft’s 36 percent.