Netscape’s IPO Case Memo
a) Why are investors excited about Netscape?
Historically speaking, the main reason that made investors so excited about Netscape’s IPO is because the whole market favored venture-backed high-technology stock offerings, particularly those related to the internet in 1990s. The market was in hot issue status that the stock prices were increased by an average of 20% on the first day of trading for nearly half of IPOs in 1995. The IPO investors had confidence to achieve a significant return on investing on Netscape. b) What is Netscape’s business model?
Netscape provides integrated application software for communications and sell the advertisements on the internet and private Internet Protocol networks.
c) What must Netscape accomplish if it is going to be successful in the long run? Netscape must keep its own product market shares in the web browsing in the long run and beat the more and more new entrants in internet service industry.
d) What are the risks Netscape faces?
Currently one of main risks Netscape faces was that whether the investors is willing to pay more for the future growth of the company which is vital for IPO’s success if they decide to accept the proposal of doubling the offering price. Another main risk is that more internet service providers had makes strides recently to move into Netscape’s market and Netscape faces a long run risk of keeping the growth in its own products and services. Question 2
What/who have been the past sources of capital for Netscape and how much capital did they provide? The first venture investment was from Clark including the $2.4 million one-time fee for the rights to certain Mosaic code and $3 million seed money. After that Clark himself contributed an additional $1.1 million in the fall of 1994 while at the same time, the Sillicon Valley venture capital firm of Kleiner, Perkins, Caufield & Byers invested...
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