Up to 400 Netscape staff face the axe following the company's shock announcement that it expects to make massive losses, PC Week can exclusively reveal. The 400 - 10% of Netscape's global workfroce - are the price paid after the company warned that it expects to make a loss of $85 million (#52 million) in the fourth quarter. Four of the company's European facilities will also be closed, prompting rumours of a takeover bid by IBM. Netscape, which was tipped by Wall Street to show a profit in the region of $18 million (#11 million), said it has been forced to streamline its business to focus on key enterprise market opportunities as well as eliminating unrelated expenses. Netscape has taken a restructuring charge of approximately $35 million (#21.47 million) in connection with the reduction in workforce, the closure of offices and other write-offs. The company's share price fell 20% on the news. Didier Benchimol, Netscape vice president and general manager for Europe, was reluctant to put a precise figure on the staff cuts, but admitted that around 400 would go. Benchimol declined to give details of which European offices would be cut. "We are considering potentially downsizing our presence in countries where the enterprise products haven't ramped up yet," he said. These include Benelux, Italy, Spain and Sweden. While Wall Street pondered its overestimate of Netscape's earning potential, analysts in the UK were just as shocked at the company's fall from grace. Mike Welch, consultant at industry analyst firm Inteco, said all the indications had been positive for Netscape's future in the enterprise arena. "I'm very surprised," said Welch. "Netscape, and indeed the market, gave the impression that it was moving into the enterprise arena and away from Microsoft to make huge gains. You'd expect news like this to be a bit further down the line." But some customers remain confident that Netscape can cope with the bad times. Chris Higgins, senior technical developer at Eurodollar, said: "You've only got to look at a company like Sybase, which has gone through really tough times, but came out a better, leaner company." Although Netscape and IBM denied rumours of a possible takeover, Welch believes the two would make a good match. He said: "It would make perfect sense for IBM to look very closely at Netscape."
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