Should Netscape go public to satisfy its capital needs?
Netscape does need to go public to satisfy its capital needs over the next three to five years. Netscape is in a position to capitalize on the consolidation of the technology sector. Further, they need to remain competitive against Micorsoft's Internet Explorer. By taking the company public, Netscape will also be able to raise capital to expand its business, finance acquisitions, pay debt and have greater access to capital in the future However, according to the article, Netscape is operating at a loss and expects to continue operating at a loss in the future. If this is the case, the company will need the funds to pay its bills. Netscape cannot pay its bills if it is losing money every year. The capital needs of the company are important, but based on Netscape's financial statements, the overall financial health of the company is ailing, which takes precedent over capital needs. If Netscape is unable to meet its financial obligations, the company may soon find itself out of business. Should an investor pay $28.00 / share for the Netscape IPO?
The IPO Price of Netscape increased from $14.00 / share to $28.00 / share because the demand for the stock is great. Although Netscape is running currently in the red, the forecasted earnings are positive and with the excess capital, the company will be able to expand their business and their profits. Therefore, an investor would want to pay the $28.00 / share if they are looking for a technology stock that is a pioneer in its field with great prospects. $28.00 / share would be the ground price, and unless the stock failed on the initial public offering, $28.00 / share could be the ground level to own it. Netscape has surprisingly managed to stay afloat while sustaining financial losses. This is mainly due to the company's ability to remain a leader in the industry through groundbreaking software and the continued services offered by the company. The additional...
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