Spyglass Executive Summary

Table of Contents Executive Summary II Introduction 3 Section I: Company Analysis 4 Company Preview 4 Products and Services: 4 Business Strategy: 5 Competitive positioning: 5 SWOT Analysis 6 Section II: Industry Analysis 8 Market Structure: 8 Stage of Industry: 8 Industry Competitive structure: Porter’s Five Forces Analysis 8 Section III: Risk Analysis 11 Business Risk 11 Financial Risk 12 Section IV: Problem Statement and Analysis 14 Problem Statement 14 Determining appropriate discount rate: 14 Cost of Equity 14 Section V: Impact of R&D 19 Forecast Variables: 19 Estimating Value with Option: 23 Simulation Analysis 23 Sensitivity Analysis 26 Sensitivity Variables 26 Spider Chart: 27 Forecasting Risk and Forecasting Range: 28 Determining the Offer Price: 29
Netscape navigator: this product is used by the different users of the internet. The product is not standardized and it requires using code to develop. This code has to purchase from the Spyglass who is the innovator of the code. The other competitors can also purchase code from Spyglass and develop navigator which can eradicate the market share of Netscape. Further the innovation of superior codes may make the product obsolete. So the technological risk of Netscape navigator is very high. 2. Server Business: in server business, the major two dimensions are cost and storage capacity. According to Moore’s Law, cost of storage halves and storage capacity doubles in every 18 months. So there is a high probability that the storage systems may become obsolete as time passes. So the technological risk of the company is very high. 3. Service Business: Service business is dependent on the successful market capture by the navigator uses, consultancy, and other services. This business may fall in a threat from other competitors if they provide superior service by product innovation. So the technological risk of the company is also high for service