Red Hat Picks Up Pieces of Netscape

Linux maker acquires security, authentication tools from AOL.

Stacy Cowley, IDG News Service

Red Hat has gone scavenging among Netscape's remains, agreeing to pay America Online up to $23 million in cash for the assets of Netscape Communications' Security Solutions unit.

The deal brings Raleigh, North Carolina-based Red Hat the Netscape Directory Server and Netscape Certificate Management System. Red Hat says it will add the software to its open-source product portfolio within the next six to 12 months.

Red Hat Chairman and Chief Executive Officer Matthew Szulik hails the new acquisitions as "secure pieces of infrastructure software."

The Netscape Directory Server is an LDAP (Lightweight Directory Access Protocol) server used for centrally managing application settings and access controls, while the Certificate Management System handles user authentication.

Ups and Downs

The acquisition marks another twist in Netscape's curvy history.

The pioneering browser helped kick off the Internet age, and the company behind it catalyzed the 1990s dot-com stock market boom with a 1995 IPO that left the fledgling company with a market valuation near $2 billion.

But when Microsoft began pushing its bundled Internet Explorer browser, Netscape's share rapidly eroded, leading to Netscape's sale in 1998 to AOL in a deal valued at $4.2 billion. Netscape's source code also seeded the Mozilla open-source browser project.

Red Hat expects its Netscape acquisition to be completed in its current quarter, which ends November 30. The company will pay AOL $20.5 million upon the deal's close and an additional $2.5 million if certain customer orders are placed before April 30.