Netscape Case

Netscape case

1. Why has Netscape been so successful to date? What appears to be its strategy? What must be accomplished if it is to be a highly successful going concern in the long run? How risk is its current competitive position?

Netscape provided a very friendly software for communications and commerce on the internet and private internet Protocol networks. This software included graphics, video and sound. Netscape interface was developed with high standard of confidentiality requirements to execute financial transactions and selling advertisements through internet and IP networks. Their browser and server functions combined gave the enterprises the capability to manage large-scale commercial sites on the internet. Their main strategy was to give “give away today and make money tomorrow”, meaning that they gave the software for free and then charged for the other services. Its competitive position is very risky since companies as Spyglass rise as code producer who is selling their products to numerous firms that will directly compete in the internet industry along with Netscape.

2. Does Netscape need to go public to satisfy its capital needs? What would you estimate might be the magnitude of its capital needs over the next 3 to 5 years? What sources other than the public equity market could be tapped to satisfy those needs?

Yes, Netscape needs to go public to satisfy its capital needs because it only has one year in a very new and unknown industry, it would have a lot of difficulties trying to get a loan in a bank. Another option other than going public would a private equity transaction.

If we make the assumptions that revenues will grow by 50, 40, 30, 20, and 10 per cent for the next years, while capital expenditures will do at 30, 25, 20, 15, and 10 per cent in the same years. By 1998 it would need $14,855 that is 31.415% of the revenues, while in 2000 it would need $24,511 of capital expenditure which is 39.269% of revenues.

3. Why,...