Netscape Initial Public Offering

Topics: Stock market, Initial public offering, Stock Pages: 3 (917 words) Published: July 12, 2011
Netscape Communications Corporation, founded in April 1994, provided a comprehensive line of client, server, and integrated applications software for communications and commerce on the Internet and private Internet Protocols networks1. Also designed with enhanced security code to provide secure financial transactions and transfer confidential information over the Internet and private IP networks. The board faced a pricing dilemma within the context of an extremely unpredictable industry. Their responsibility was to determine the appropriateness of the proposed increase in price after balancing the potential risks and rewards that might accompany such a move1. Netscape has been so successful due to a few factors. For one, Netscape has stellar management making important business decisions. Also, they have proven to be successful in securing a steady flow of capital injections from various private investors. By setting a new business standard between 1994 and 1995, Netscape was able to dominate in overtaking Mosaic, the largest market share holder of that time. However, the threat of its competition has become increasingly worrisome and their position is rather risky. Thus, Netscape must consider going public and generate capital in order to maintain a competitive advantage and continue to capture market share. Netscape needs to seriously consider undertaking an IPO because it has reached a point in its development that demands substantial injection of capital. Although going public will result in a decrease in the control the original owners have in Netscape, issuing shares on the open market will allow the organization to generate enormous capital while avoiding an increase in its debt obligations. Although Netscape has been privately held and can attract private through private placements, these investors hold illiquid shares because of the difficulty to find a buyer for their shares. After going public, these shares will then become very...
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