"There can be no assurance that commerce and communication over the Internet or private Internet Protocol networks will become widespread. It is difficult to predict the future growth rate, if any, and size of this market."

That quote comes from the July prospectus for Netscape Communications Corp.'s initial public offering, even though it sounds like it was bellowed by some latter-day Luddite. Granted, these lines only accounted for a very small portion of the 60-page document, but they help lend some much-needed perspective to all the hype surrounding the Internet, on-line banking and firms, like Netscape, that are helping banks reach this market. Netscape's software is being used by MasterCard International, First Data Corp. and several banks for doing business on the Internet.

The words of caution were all but ignored by the investment community when Netscape went public last month. The early prospectus sought a price per share of $12 to $14, although that figure had doubled during the time Netscape put the final touches on its offering. When the stock opened on Aug. 9, it peaked at $74.75 before closing that day at $58.25.

That's not bad for a company that has lost $12.8 million on sales of $16 million since it was created in April 1994. That Netscape has not made any money yet shouldn't be a cause for concern, says Roger McNamee, a general partner at Integral Capital Partners, an investment management firm in Menlo Park, CA. Essentially, it's been investing in market share and owns the lion's share of crucial pieces of the Internet market.

Now the company must prove it can turn this market share into a profitable venture. That would demonstrate that the Internet is ready for business.

The Internet "is going to be the next huge market for software," McNamee says. "If you were going to be the next Microsoft, you would have to look like Netscape, but just because you look like that doesn't mean you will be the next Microsoft."

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