Netscape Case Study

6. As an executive of Netscape, what would you recommend with respect to the proposed offering price? As an investor in Netscape, what would you recommend? AS a manager of an institutional fund who is willing to buy and hold Netscape’s stock at the originally proposed price of $14 per share, would you be willing to buy and hold at an initial offer price of $28.

Advantages- Less liability for stakeholders. Ability to raise funds/capital in the form of stocks as needed.

Downsides to being a public limited company is that there will be greater access to the company’s financial performance and actions which loses abut of the businesses privacy. The value of the company will be determined by financial markets through the trading of the company’s shares.

The time is now 1995; the internet is slowly evolving, and just as the company survived the arrival of television and other technology so it must with the internet. Convinced the internet will have

"People have said these things are starting to filter down to smaller, non-public companies, Banks are requiring different standards for corporate governance which has increased as a direct result of Sarbanes-Oxley. People have started talking about spending more for internal controls, software, having to hire more auditors and higher D&O [directors and officers] insurance." (Leport 2005)

Week 7 Chapter 6: Investors in the Share Market True/False QUESTIONS 1. Investing in shares of publicly listed corporations should, on average, over time provide a higher return than investing in fixed-interest securities. a. True b. False 2. Investments through a stock exchange are limited to ordinary shares issued by listed corporations. a. True b. False 3. Portfolio theory contends that a diversified share portfolio enables an investor to significantly reduce the portfolio’s exposure to systematic risk. a. True b. False 4. A share that has a beta of one is twice as risky as an average share listed on a stock market. a. True b. False 5. Shares that typically demonstrate a negative price correlation will usually move in the same direction

First, Microsoft ‘encouraged’ Compaq, Apple, and other computer manufacturers to promote only Internet Explorer, and to make that the default browser on their PC. This encouragement came in the way of threats to eliminate or delay licensing of operating systems, providing the browser for free to internet access providers, and bundling the software with the operating system under the guise of interactive ease for the consumer. This manipulation led to an increase in the browser’s sales by 45 to 50%, which paralleled the decline Netscape experienced in their market sales in 1998.6

There are considerable advantages with obtaining equity through the IPO process. There are, however, some drawbacks that also need to be taken into consideration. Some of the advantages and disadvantages are:

(1) According to the case, global IPO activity during the first quarter of 2012 fell to $14.3 billion, which was dramatically down from $46.6 billion during the first quarter of 2011. In addition, we can see in Exhibit 5 that IPO activity in US have dropped sharply since the second quarter of 2011. Number of deals dropped from 383 in the second quarter of 2011 to 157 in the first quarter of 2012.

3. develop a deeper appreciation for challenges of valuing unseasoned firms and enhance corporate valuation skills

2. What is MS’s pricing and distribution strategy for IE?  How does this compare to Netscape? Why would MS pursue this pricing strategy?

Therefore, these concerns can only be handled after the company decides on the offering structure, which defines investor’s demographic and a precise stock exchange to list on. Afterward, the company and its underwriters must begin to prepare the required documentation for both potential investors and regulators. The main documents are registration statements and a prospectus which contains all the financial and non-financial information that potential investors require in order to make the investment decision. In most countries, the contents of the prospectus must be approved by the local securities regulators before it can be distributed to potential buyers. (Bodie et al. 2005,

The Internet Software and Services industry is currently in the growth phase of the industry life cycle. Hook defines the growth stage as “Product acceptance is established. Rollout begins and growth accelerates in sales and earnings. Proper execution of strategy remains an issue” (Hook 89).

The decision by a company to go public and sell its stock to the public is normally an expensive process, especially for small companies. This decision is guided by a consideration of the advantages and disadvantages involved in going public. A privately held company may decide to sell its stock to the public through an initial public offering due to several reasons. First, such a company may engage in an initial public offering when it seeks to raise extra capital through the sale of ownership to the public ("Initial Public Offerings Investor Guide", par, 2). However, the most common reason is that the capital generated through this process doesn't need to be repaid though debt securities like bonds

Beginning in the 1990’s, the world has witnessed a tremendous growth in the World Wide Web. This boom has resulted in an unstoppable technological revolution that continuous to change our lives. The 20th century has blossomed with the rapid expansion of the Internet. Yet, this expansion has brought with it both, opportunities and challenges; particularly, in the “dot- com” industry. As a result, companies of all kinds employed the Internet as a tool to expand their business reach. For others, the Internet was a new “gold mine” that gave birth to a multi-billion dollar business, named “Google”.