Case Netscape - Public Offering

Case 1 – Netscape Initial Public Offering

Course: Corporate Finance

Date: 09-02-2015

Netscape Communication Corporation

Netscape Communication Corporation is a software company founded in April 1994 by Marc Andreessen (co-founder of Mosaic) and Jim Clark (founder of Silicon Graphics). Their mission was to provide open software that connects information and people over the Internet and Intranet. The industry Netscape was in was an extremely unpredictable industry. This Internet sector was fast growing, and quickly expanding. The stock prices increased rapidly and the future profit expectations were great. These times were promising, and therefore the opportunity for young companies to go public. However, there were huge risks involved for these young companies in the type of sector. This case answers the questions with respect to the Initial Public Offering of Netscape.

Case Questions

Question 1. Why has Netscape been successful to date? What is its strategy? How risky is its current competitive situation?

During the start of Netscape, mid-nineties, the Internet market experienced an enormous evolution. This creates new opportunities for software companies, as the market was growing very fast. The advantage of Netscape was being the first one who focused one-web browsers. Besides the first-mover advantage, they had a little competition in the market from other companies. There were no other dominant players in the market. Therefore in a short time period, they achieved the market leader position with the Netscape communicator and commercial. Netscape could command strong customer loyalty and high brand recognition, which enabled them to grow in the leader position. The disadvantage, which was involved with these opportunities, is the competition from multiple players who are coming in. In a short time period more competitors are attracted and this increases the risk for Netscape. Netscape introduced a competitive line of...