Netscape Ipo

A recurring point in Gilbert's studies included the notion that people were utterly incapable of making predictions that would lead to their actual optimal happiness. A study showed "that about nine out of ten people expect to feel more regret when they foolishly switch stocks than when they foolishly fail to switch stocks", but the study also showed that those "nine out of ten people are wrong" in assuming that expectation (Gilbert 135). A majority of consumers also made an incorrect assumption, as described by Stiglitz, which resulted in the maintenance and growth of one of the most well known monopolies of the present. The consumers assumed that, due to it's "near-monopoly on PC operating systems," Microsoft was a good and innovative company and is capable in handling computer systems. This was not the case when it came to "alternative technologies" such as the "development of the Internet and the web browser" because their competitor, Netscape, was "building on government-funded research" while Microsoft had no such incentive (Stiglitz 405). Microsoft then decided to launch their Internet Explorer, but by itself Internet Explorer could not compete against Netscape. They knew this, and so "decided to use its monopoly power in PC operating systems to make sure that the playing field was not level." They offered Internet Explorer for

On May 18, 1999, the U.S. Department of Justice and twenty states filed antitrust lawsuits against Microsoft Corporation. They claimed that Microsoft 's business practices violated the Sherman Antitrust Act of 1890; which is designed to protect consumers and not allow fixed priced or rigging bids. Basically they claimed that Microsoft was a monopoly. Microsoft defends this charge by saying that the lawsuit will hurt consumers by distracting the company from technological advances. Competitors claim that Microsoft pressures vendors to choose its Internet Explorer over Netscape Navigator. Gates argues that Netscape 's longtime dominance in the

“All of these qualities were evident in Gates’s nimble response to the sudden public interest in the Internet. Beginning in 1995 and 1996, Gates feverishly refocused Microsoft on the development of consumer and enterprise software solutions for the Internet, developed the Windows CE operating system platform for networking non computer devices such as home televisions and personal digital assistants, created the Microsoft Network to compete with America Online and other Internet providers, and through Gates’s company Corbis, acquired the huge Bett mann photo archives and other collections for use in electronic distribution.

Flatter #2: 98/9/95 Netscape: Friedman believes that this was the essence of people to people connectivity and hence a huge flattener. He says that Netscape going public played a key role in commercializing internet and making it accessible to everyone across the globe.

As a result, subscriber retention rates were high. Second, because AOL was able to act as a powerful intermediary between a large subscriber base and high quality content providers, it had significant bargaining power with both parties, increasing its profitability. Third, chat rooms, which were a very popular part of AOL 's service offering, benefited from the large subscriber base. Chat rooms offered the unique feature that the subscribers themselves created the content in real time. Question 2 By 1995, several important changes were taking place in the commercial online industry. First, Microsoft decided to enter the industry with its Microsoft Network (MSN). Given Microsoft 's vast installed base of operating systems, it had a natural advantage in gaining market share quickly if it could bundle MSN with its MS-DOS or Windows operating systems. Given the considerable financial resources available to Microsoft, MSN could be a source of formidable competition to AOL. Another source of potential competition to AOL that began to emerge by 1995 was Netscape. By offering easy-to-use Web browser programs, Netscape enabled free access to the Internet and the vast array of data on the World Wide Web. As a result, commercial online services like AOL, which charged a fee to access the same data, faced an important threat.

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

In order for Microsoft to be able to reach the goals set by Bill Gates, they must use their considerable resources efficiently to create a place in each market for the online consumer. If they wish to produce and offer online services such as electronic mail, information data bases, personal finance management, video on demand, and electronic commerce, then acquiring firms already specialized in at least some of these areas is the most efficient way to do so. Intuit’s products align with Microsoft’s without significant overlap such that the combined firms would provide a handsome horizontally integrated suite of products with prime market share positions including word processing (49% market share), spreadsheet (48% market share), tax preparation, accounting, banking, and bill paying which would all open up the prospect of continued online grazing by the user leading to repeat sales to Microsoft’s video on demand and future entertainment market. The larger objective would be to capture the user in a web to conduct direct financial transactions over the

The largest stakeholder of Netscape’s equity was Jim Clark, who accounted for 24%. The other primary owners were the venture capital firm Kleiner, Perkins, Caufield, & Byers, a group of six media companies led by Adobe Systems, and Netscape’s president and CEO, James Barksdale. They held 11%, 11%, and 10% of Netscape’s equity, respectively. The ownership shares of Netscape did not correspond to the investments made by the primary owners because the owners made their investments at different times. Jim Clark invested in Netscape first and therefore paid the least amount of money for the largest share of the firm. His second investment came at the same time as Kleiner Perkins, and at that point the price to purchase a share of Netscape had obviously increased. Clark’s total investment amounted to $3.5 million for 24% of the firm, whereas Kleiner Perkins paid $5 million for 11% of the firm. The investment made by the media companies came later, when the price of Netscape had risen even further. Therefore, the media firms purchased an aggregate 11% share of Netscape for $18 million. The final primary owner, Barksdale, was not said to have invested any capital in Netscape. However, as president and CEO, it can be assumed that he was offered a 10% share as an incentive to guide and motivate the company to perform well.

Netscape's assent would have ensured that, for the foreseeable future, Microsoft would produce the only platform-level browsing software distributed to run on Windows, Internet Explorer. This would have eliminated the prospect that non-Microsoft browsing software could weaken the applications barrier to entry. Executives at Microsoft received confirmation in early May 1995 that Netscape was developing a version of Navigator to run on Windows 95, which was due to be released in a couple of months. Microsoft's senior executives understood that if they could prevent this version of Navigator from presenting alternatives, the technologies branded as Navigator would cease to present an alternative platform to developers. Even if non-Windows versions of Navigator exposed Internet-related Application Programming Interfaces (APIs), applications written to those APIs would not run on the platform Microsoft executives expected to enjoy the largest installed base, i.e., Windows 95. So, as long as the version of Navigator written for Windows 95 relied on Microsoft's Internet-related APIs instead of exposing its own, developing for Navigator would not mean developing cross-platform. Developers of network-centric applications thus would not be drawn to Navigator's APIs in

At the beginning , in “Browser Wars”, a brave bunch felt that they were going to be the only one’s to bring computer users the only browser, as Netscape. Microsoft showed then that they weren’t going to be left out of this genre matter what. Even though most of

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

In the editorial “Verizon’s AOL deal: ISPs go searching for content”, by The Times Editorial Board, points out the important benefits that Verizon acquired by buying AOL, the most popular dial-up internet service in the country. The principal reasons of the agreement to buy AOL and the benefits they received are: AOL’s content business, the subscriber's exclusive content access, and the probability to have preferable treatment to sites and services for their customers. First, Verizon's smart move was to obtain primarily the business content from AOL. All the advertising tools from AOL are an important investment for the future of Verizon's strong standing. Another benefit that Verizon obtain from AOL was the subscribers

Microsoft announced to integrate the internet technologies on Windows 95 and Office 97 giving an impetus to the sales of these products and a portion of these revenues should be deferred into the future.

* Capital raised in an IPO can be used to pay off debt and thus reduce the interest costs and enhance the company’s debt to equity ratio

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.