Netscape fighting a two-front war Its mission: Defend lead in Net browsers, tackle corporate software

Computers

October 20, 1997|By BLOOMBERG NEWS

MOUNTAIN VIEW, Calif. -- Netscape Communications Corp. Chief Executive Jim Barksdale counted on something big from the very start.

Even before the Internet software maker earned its first nickel, Barksdale -- or "J.B." to employees -- installed an accounting system that could handle billions of dollars in sales.

"We started from day one assuming that we were going to be a big company," said Barksdale, 54, seated in a conference room overlooking construction of new Net-scape offices.

Nearby is a plaque signed by the company's then-300 workers marking Netscape's August 1995 initial public offering of stock. Today, the company has 2,200 employees -- and sales will pass the half-billion-dollar mark this year.

Barksdale now faces his toughest task since Net--scape made history with one of the hottest IPOs ever: Guiding the company as it elbows its way into the corporate software market, an area dominated by Microsoft Corp. and International Business Machines Corp.

"It's made the management task unusually challenging," said Roger McNamee, general partner at Integral Capital Partners in Menlo Park, Calif., which owns Netscape stock.

Meanwhile, Barksdale must defend Netscape's lead in the market for browsers, software that lets computer users search the Internet, against a relentless assault by Microsoft.

Barksdale stands as good a chance as anyone of winning this two-front fight. His record includes top jobs at start-ups McCaw Cellular Communications and Federal Express Corp., both of which wound up as the biggest businesses in their industries.

A transplanted Southerner whose navy blue blazer, Hush Puppies and wry sense of humor suggest a favorite college professor rather than a Silicon Valley CEO, Barksdale is undeterred by those suggesting this time it will be harder for him. Nor is he fazed by Netscape's gyrating shares, which at $40 are about half their record high.

"We should issue a seat belt and a neck restraint with our stock," said the Mississippi native and graduate of the University of Mississippi.

As befits a man of the South, Barksdale is all gentleman when talk turns to his widely reputed feud with Microsoft Chief Executive Bill Gates, whose company is nibbling into Netscape's lead in the market for browsers.

"I think the world of Bill Gates," said Barksdale, who has met Gates once in the last two years. "I'm a great admirer."

The competition heated up with the unveiling of Microsoft's updated browser, Internet Explorer 4.0. In a playful prank, Microsoft workers put a giant letter "e," the logo for the Explorer, on Netscape's lawn at its Mountain View headquarters. Not to be outdone, Netscape toppled the "e" and planted a sign reading "Net-scape 72 -- Microsoft 18," referring to their respective shares of the browser market.

Fun and games can mask Barksdale's competitive side, honed from leading fast-growth start-ups. He was president of wireless phone company McCaw Cellular, which AT&T Corp. bought for $11.5 billion, and chief operating officer at Federal Express, the biggest overnight package service.

Bob Ratliffe, who worked at McCaw, said Barksdale was especially cool-headed when reports suggested that cellular phones caused cancer. The scare sent McCaw's stock reeling.

"Jim in nothing flat, said 'Here's what we're going to do,' " Ratliffe said.

Netscape General Counsel Roberta Katz, who also worked at McCaw, said Barksdale's leadership was subtle yet indisputable.

"He'll take every idea at face value and keep sifting and winnowing," she said. "He'll start guiding the conversation so that a conclusion that is obvious to him becomes obvious to everyone else."

Those skills are one reason Barksdale was named in some news reports as a potential candidate to replace Robert Allen as chairman and CEO of AT&T, where Barksdale worked briefly after the long-distance telephone company bought McCaw. Barksdale declined to comment except to say, "I love what I'm doing. I love this company. I love the people."

His management talents are also the reason Netscape founders Jim Clark and Marc Andreessen sought Barksdale to run their company, which they started in 1994. Clark had started Silicon Graphics Inc., whose powerful computers were used to make movies such as "Toy Story" and "Jurassic Park," while Andreessen was a then-23-year-old University of Illinois graduate student who helped write the computer code used in browsers.

Barksdale's job is hardly done at Netscape. The company posted a second-quarter loss of $43.8 million after a charge of $52.6 million related to an acquisition.

Meanwhile, analysts worry that its new corporate software, which is much costlier than a browser, forces customers to take more time to consider the product and thus lengthens the sales cycle.

"The expectation that they can dislodge the two most formidable players in the game, Microsoft and IBM, is an ambitious expectation," said Charles Finnie, an analyst at Volpe, Brown, Whelan & Co.

Barksdale is used to playing the underdog and he says it only makes him try harder.

"I don't like anybody calling my baby ugly," he said.

And to stress that his interests are the same as those of investors, he rejected a huge salary last year, taking $1 in annual compensation. The rest of his pay is tied to Netscape's shares, which have dropped about 30 percent in 1997.

"This year, I'm hoping I'll get a 100 percent increase and get $2," Barksdale said.

Investors can only hope he makes Netscape's stock do the same thing.

Pub Date: 10/20/97

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