NEW YORK, Jan 5 (Reuters) - Morgan Stanley said its analyst Dwight Harbinger lowered his rating on Netscape Communications (Nasdaq: NSCP - news) from "Outperform" to "Fucked". Harbinger summarized, "They're fucked! I don't know what the hell they're going to do!"
Netscape's preliminary earnings report, out today, portends a -750 percent surprise in quarterly earnings. Harbinger said in a research note that the company was still working hard to make the quarter, and that there is a 17 percent chance that Netscape will report an operating profit. "But there's only a 3 percent chance of that," he added. "Man, are they up shit creek." Harbinger declined to characterize them as either with or without a paddle.
The report stopped short of declaring NSCP's demise imminent. "It would absolutely amaze you how long they can limp along like this," it stated, while cautioning that further downgrades were possible in the near future. According to Dataquest analyst Steve Shmaltz, "Most people are only aware of a few of the investment rating categories used by Morgan Stanley, from 'Strong Buy' to 'Strong Sell', but actually there are twelve. 'Fucked' is level 9 -- just one level below 'Worthless' -- and is currently applied to only two companies, NSCP and Netalavista, Venezuela's state-run Internet 'browser' software company." Should NSCP be further downgraded, it would be the first time in decades that they have used one of the lower ratings: "Fucked Raw", "Fucked Bloody", and "Abso-fucking-lutely Totally Shit-Fucked."
NSCP's preliminary earnings report noted that its fourth quarter restructuring charge of about $35,000,000 will enable the company to focus on the enterprise software business. NSCP sees one-time charges continuing to grow, topping off at 80 percent of total expenses sometime next year. Investors tend to view such one-time charges as a positive, instead of the strong negative associated with operating losses.
Netscape, long a darling of Wall Street, is widely hailed for its innovation in finance juggling. But some observers are saying that Netscape may be out of tricks. "They could lay off their entire work force. That would let them write off this quarter's payroll as a one-time charge, and hiring them back next quarter will make for even bigger `restructuring' charges," suggested Lehman Brothers analyst Felix Pappalardi. "Beyond that, they're fucked! I don't know what the hell they're going to do!"
"We plan to address these issues immediately," said Jim Barksdale, Netscape's president and chief executive officer. "To accelerate our transition to blah bla-blah, blah streamline, bla-blah blah focus, blah key enterprise market opportunities. Bla blah investments blah blah position bla-blah blah industry leader blah blah growing blah blah Internet. Blah blah I'm not wearing any pants! Blah focus blah aggressively pursue blah blah blah return to profitability in 1998. Blah blah nurse! Where's my colostomy bag? Blah bla-bla blah we're fucked! I don't know what the hell we're going to do!" The Pillsbury dough boy, Netscape's Executive Vice President of Product Development, was unavailable for comment.
"Maybe they can blame it on Asia this quarter," said Internet.com `analyst' Steve Harmon, noted Netscape cheerleader. He sees a positive side to the loss. "Beyond a certain point, you can't have such tremendous one-time charges without also having consolidated losses." Harmon reiterated his strong buy rating on the company. "I like this high-growth, high-risk, high-reward company." NSCP losses grew 87 percent this year, and analysts say they could grow even more next year. Added Harmon, "What are you looking at? You can't make me say they're fucked. Nya-nyah!"