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Oracle, Netscape merge NC units

NCI and Navio merge to form a new company bearing the NCI name, focused on network computer and Net appliance software.

REDWOOD SHORES, California--Aiming squarely at Microsoft (MSFT), Oracle (ORCL) and Netscape Communications (NSCP) announced today that they will merge their subsidiaries focused on Network Computer-based technologies.

As reported by CNET's NEWS.COM last week, Oracle's Network Computer Incorporated (NCI) will merge with Netscape's Navio Communications to form a new company bearing the NCI name to develop software for Network Computers and other non-computer Internet appliances, including Internet TVs.


Larry Ellison on the NCI-Navio deal
"NCI's purpose has been to create a single software standard for a family of low-cost digital appliances," Oracle chairman Larry Ellison said today at a press conference here. "The real competition is Microsoft--other players are not significant in the least."

Microsoft's $425 million acquisition of WebTV Networks April 6 clearly motiviated both companies. WebTV is, so far, the market leader in Internet-enabled set-top boxes.

With the merger, NCI acquires a consumer potential for its Network Computer strategy, which so far has focused primarily on devices for businesses. Jerry Baker, who will continue as NCI's CEO, said Navio's technology will be incorporated into consumer devices on retail shelves for this year's holiday buying season. The companies expect to preview the fall line in late June or early July.

Neither company announced financial details of the deal, although Oracle said it will take a $60 million charge, or 6 or 7 cents a share, half in its first fiscal quarter and the remainder spread out through the rest of its fiscal year. Oracle indicated the size of the charge does not necessarily correspond to the value of the deal.

"We now have a significant position in a bigger company," Netscape CEO Jim Barksdale said. Oracle will hold a majority interest in the merged NCI, while Netscape will keep a significant minority interest. Nescape and Navio's other investors now will get a stake in NCI.

Wei Yen, a former senior vice president of Silicon Graphics and now CEO and president of Navio, will become president of the merged operations. No layoffs are foreseen among NCI's 120 employees or Navio's 80, and the companies expect to relocate to a new San Francisco Bay Area location.

Barksdale and Ellison will join Baker and Yen on NCI's board of directors.

Netscape formed Navio last August as an affiliate and held an equity stake for contributing its Navigator browser technology to the new entity. The company is one of many investors but holds a major equity stake. Nintendo, Sony, Sega, NEC, IBM, and Oracle also backed the venture.

"It would be a good thing for the category," said Steve Perlman, chief executive of WebTV Networks. "It's better having two major players like Navio and WebTV in addition to a bunch of smaller players."

After the merger with Navio, which government regulators still must approve, NCI will offer the Navio Web browser as an option on machines it designs. Today, those designs use the Netscape browser. NCI licenses its NC operating system software to hardware companies that manufacture the devices.

Word of the pending deal took some Navio customers by surprise. An executive with Tektronix, which plans to use Navio Navigator technology in its netstations, said on Friday that he was not aware of the deal. "We have protections [under our contracts for a change in ownership]," he said. "It won't affect us, at least in the near term."