Sun Microsystems to Pay $1.25 Billion to America Online as Part of Netscape Deal

Strategic Insights -

Sun Microsystems Inc., a leading provider of Java-based solutions, has agreed to pay over $1.25 billion to America Online Inc. as part of their partnership to sell Netscape Communications Corp.'s software. The financial details of the deal were outlined in a recent filing with the Securities Exchange Commission (SEC), revealing that Sun will guarantee AOL revenues of $975 million from sales of Netscape products over the next three years, in addition to $278.5 million in licensing fees and $30 million in marketing fees per year. This significant investment underscores the strategic importance of the partnership between Sun and AOL, which aims to accelerate the growth of electronic-commerce using Sun's Java technology.

Key Takeaways:

  • Sun Microsystems will pay over $1.25 billion to America Online Inc. as part of their partnership to sell Netscape Communications Corp.'s software.
  • The payment includes a guarantee of $975 million in revenue from sales of Netscape products over the next three years.
  • Sun will also pay licensing fees of $278.5 million and marketing fees of $30 million per year for the next three years.
  • The partnership between Sun and AOL aims to accelerate the growth of electronic-commerce using Sun's Java technology.
  • The two companies will collaborate on developing next-generation electronic-commerce applications and Internet devices.
  • Sun will be able to sell AOL's Netscape-branded line of middleware software through both companies' sales channels.
  • The partnership includes a commitment to develop the next generation Netscape Navigator and Communicator browser software.
  • America Online has announced support for Java technology from Sun in its electronic-commerce offerings.

Statistics:

  • $1.25 billion: The total amount Sun Microsystems will pay to America Online Inc. as part of the partnership.
  • $975 million: The revenue guarantee from sales of Netscape products over the next three years.
  • $278.5 million: Licensing fees Sun will pay over the next three years.
  • $30 million: Marketing fees Sun will pay per year for the next three years.
  • $4.3 billion: The amount AOL agreed to pay for Netscape Communications Corp. in 1998.
  • $500 million: The amount AOL agreed to purchase in hardware and services from Sun over the next four years.

Sources:

  • Sun Microsystems Inc., http://www.sun.com
  • America Online Inc., http://www.aol.com
  • Newsbytes News Network, http://www.newsbytes.com
  • Reported by Matt Hines, Newsbytes, on February 11, 1999.