Netscape Communication Corporation

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  • Topic: Usage share of web browsers, Web browser, World Wide Web
  • Pages : 24 (6627 words )
  • Download(s) : 231
  • Published : October 10, 2010
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Table of Contents
Executive SummaryII
Introduction3
Section I: Company Analysis4
Company Preview4
Products and Services:4
Business Strategy:5
Competitive positioning:5
SWOT Analysis6
Section II: Industry Analysis8
Market Structure:8
Stage of Industry:8
Industry Competitive structure: Porter’s Five Forces Analysis8
Section III: Risk Analysis11
Business Risk11
Financial Risk12
Section IV: Problem Statement and Analysis14
Problem Statement14
Determining appropriate discount rate:14
Cost of Equity14
Section V: Impact of R&D19
Forecast Variables:19
Estimating Value with Option:23
Simulation Analysis23
Sensitivity Analysis26
Sensitivity Variables26
Spider Chart:27
Forecasting Risk and Forecasting Range:28
Determining the Offer Price:29
Alternative Valuation30
Section VI: Recommendation and Its impact32

Executive Summary
Founded in April 1994, Netscape Communications Corporation provided a comprehensive line of client, server and integrated applications software for communications and commerce on the internet and private Internet Protocol (IP) Network. These products enabled the growing network of servers on the World Wide Web to communicate through multimedia, including graphics, video and sound. The main requirement is to find an appropriate IPO offer price that will maximize the company’s net proceedings and at the same time market will purchase all the IPO offered at that price. Different procedures have been taken to find out an IPO offer price. In section I, we have analyzed the different aspects of the company like company preview, company products, business strategy, competitive positioning and SWOT analysis. In section II, industry analysis has been conducted to assess the industry condition and competitive nature of the industry. The industry life cycle, market structure, and Porter’s five forces analyses have been to assess the industry condition. In section III, different types of risks have been calculated to assess the riskiness of the company as well as the industry. To do so, business risk, financial risk, technological risks have been calculated. In section IV, problem statement has been identified and analysis has been done to find out the solution of the problem. In this case a base case valuation, considering no success in R&D, has been done. In section V, valuations of different alternatives have been done using the impact of research and development. Valuation using the option model considering the success probability of R&D has been done. There are other alternative valuations also have been done. Simulations, sensitivity, spider, tornado charts have been shown in this section. And finally in section VI, a recommendation of offer price of $20 has been suggested for the Netscape Communications Corporation’s IPO. And an impact analysis of issuing IPO has been conducted to assess how it may impact in the firm’s value per share after issuing IPO.

Introduction

Financial Decision making involves a wide range of decision that finance manager need to undertake in order run the business and these decisions are very sensitive with the performance and prospect of a company. So care must be taken while making decisions. This case on the company Netscape Communication Corporation, deals with the issue of determination of price when it wants to go public. The company is in start-up phase and presently experiencing loss. The main dilemma is what should be the offer price? To determine this we have analyzed various aspects of case of Netscape and finally based on our analysis we have set an offer price. Section I: Company Analysis

Company Preview
Founded in April 1994, Netscape Communications Corporation provided a comprehensive line of client, server and integrated applications software for communications and commerce on the internet and private Internet Protocol (IP) Network. These products enabled the...
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