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Netscape goes on buying spree

Netscape is acquiring two small companies in a stock deal worth $56 million.

Netscape Communications (NSCP) today acquired two small firms to help bolster its Web design and messaging products.

The Internet software company said it will issue about 2.08 million Netscape shares to purchase the two firms--DigitalStyle and Portola Communications. That would make the transactions worth more than $56 million based on the current value of the stock.

The acquisition was announced today after the market's close.

DigitalStyle is a Web graphics tool vendor; its WebSuite product spruces up the design of Web pages. Portola Communications is an expert in "high-performance messaging systems", according to Netscape, though the company has yet to ship anything.

The buyouts mark the fifth and sixth acquisitions for Netscape, a spokeswoman said. The other four took place between September 1995 and March 1996; Netscape bought Collabra (messaging and groupware), InSoft (network communications and multimedia software), Netcode (Java tools), and Paper Software (3D and graphics multimedia). All were privately held.

Daniel Rimer, an analyst with Hambrecht & Quist, said he wasn't too surprised by the buyout of DigitalStyle because the two companies already work closely together. "There's no question that given Netscape's focus on the enterprise, it's a buy-vs.-build situation," he added.

John Myers, a pioneer of the IMAP4 email protocol and a key contributor to other Internet standards, comes as part of the Portola package. A Netscape spokeswoman said that "less than 50 employees" from the two companies will join Netscape.

"With these acquisitions, we will bring great new talent on board at Netscape and help accelerate our efforts to meet the needs of corporate customers," Mike Homer, senior vice president of marketing at Netscape, said in a statement. "In '97, the focus at Netscape is on the messaging and groupware markets, and there is remarkable synergy between the work of these companies and our goals."

Netscape's shares closed today at 27-1/16, up 15/16 from yesterday.