Marc Andreessen, chairman of Loudcloud

This is a partial transcript from Your World with Neil Cavuto, August 30, 2001.

NEIL CAVUTO, HOST: On Wall Street, these days, you take what you can get. So when a company comes out with less-than-expected losses, you cheer. And if you're the guy who runs the company, you really cheer. Marc Andreessen here now to, no doubt, pump up his suddenly pumped-up Loudcloud, the company that helps post companies on the Internet, including Fox News, I might add.

Loudcloud bucking the down trend on Wall Street today, picking up about 18 percent to about $2.20 a share — well shy of the $7 52-week high, however.

Marc, good to see you.

MARC ANDREESSEN, CHAIRMAN, LOUDCLOUD: Good to see you. How are you doing?

CAVUTO: Congratulations on these better-than-expected numbers. Boy, Wall Street needed more stories like that today. What happened?

ANDREESSEN: I tell you, we had a good quarter. We had revenue up, we were able to improve our cash and earnings guidance, and we've had some pretty strong reception from our customers, including Fox, so we're pretty happy.

CAVUTO: Yes, Qwest Communications, others. I mean, you're definitely getting the "biz." But Wall Street still is in doubt, I mean, today's performance not withstanding. What do you think is going on here with technology in general?

ANDREESSEN: Well, you know, the technology industry in general I think is going through a shake out. I think it's a time of great seriousness, in terms of how companies look at their investments in technology, after the speculative frenzy in the last five years. And what our customers tell us is they will make investments when they know it's going to pay off, when they know it's going to cut their costs, when they know it's going to help them go after customers or launch new projects that they need to launch. This is a very, very serious time, and so it's gotten harder to sell than it was, you know, two years ago.

CAVUTO: If you indeed succeed, and most of your backers, obviously, clearly believe you will, you could be a testament to the Web still being a viable business entity. There are a lot of cynics who say no to that, even though they think that you're on to something. How do you convince those cynics that you are?

ANDREESSEN: Yes, well, you mainly do it through execution, and so what we're doing is going out and focusing on execution in the market. With Qwest, as you mentioned, our huge new partnership with Qwest. We're going out with Qwest nationwide sales for us, going in alongside Qwest and a huge number of accounts. We're working very hard on operational efficiency, working very hard on getting to profitability and cash flow will break even in 2003. And just very, very focused on that. So I think ultimately, results count, and that's the kind of market we're in.

CAVUTO: Do you ever talk to your old buddies at Netscape, now part of AOL Time Warner, which, in and of itself, is weird.

ANDREESSEN: Oh, sure, absolutely.

CAVUTO: And what do they say? Like, hey, you're doing well, can we join you? We've got to get out of here — what?

ANDREESSEN: Well, you know, we've got some people who had the good fortune along with me to work at Netscape. Some of those folks are at Loudcloud. Others of those folks are all over the valley. A number of those have started their own companies, Tell Me and a whole bunch of others, many of which are doing very, very well.

CAVUTO: Yes.

ANDREESSEN: And there's still a good group of people who are left there, who are, I think, having a good time.

CAVUTO: Do you feel weird now with the upcoming release of Windows XP that, you know, everyone says net who? Now it's going to MSN or whatever built-in standards will be in that, the same thing that got you guys dragged into court in the first place?

ANDREESSEN: I'll tell you, the good news is, Loudcloud is a very good partner of Microsoft, and so we're very excited...

CAVUTO: That's weird. That, alone, by the way, is very weird. And I keep mentioning this to you, but you don't seem to think it's weird.

ANDREESSEN: It's like they said in The Godfather, they said, you know, it's business, not personal.

(LAUGHTER)

ANDREESSEN: And we — it's the exact same thing. So we're very strong supporters of Windows 2000 and of all the Microsoft server products, as well.

CAVUTO: But I mean, you're doing business with Bill Gates?

ANDREESSEN: You betcha.

CAVUTO: Bill Gates, the Justice Department argues, pushed you out of business. He killed you, he squashed you like a bug. And now you're back in bed with the guy who squashed you like a bug.

ANDREESSEN: Absolutely, and we're doing a ton of business with him. We have very happy customers.

CAVUTO: You don't mind. That's OK.

ANDREESSEN: That's just fine.

CAVUTO: Do any of the Netscape devotees, your old enthusiasts, say hey, Marc, I mean, what happened to your religion?

ANDREESSEN: Like I said, it's not religion. I mean, I think you could, and there are some people who do spend their whole lives fighting Microsoft. I don't think that makes a whole lot of sense. I can tell you it's a lot more fun to not to be competing with Microsoft than it is to compete with Microsoft.

CAVUTO: All right, was any talk ever given that Microsoft would serve a larger role at Loudcloud? You know, you're a relatively inexpensive stock to buy outright.

ANDREESSEN: Yes, I mean, our public float is relatively low and, you know, as you've seen, we've had some shareholders come into the stock this week. I'd encourage people to look at it as a potential investment. You know, we feel very confident. As you know, I bought a million shares in open market last time the trading window was open. I feel very good about that.

CAVUTO: Come on, Marc. That's chump change for you. Are you kidding? A million shares, that's lunch money.

ANDREESSEN: Our window was open for all of a week and a half, so that's all I could get. But we're feeling good about it.

CAVUTO: Marc, a real pleasure. Thank you very, very much.

ANDREESSEN: Good to see you.

CAVUTO: Marc Andreessen, the chairman of Loudcloud.

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