Netscape Communication Case Study

4375 Words 18 Pages
Register to read the introduction… These products enabled the growing network of servers on the World Wide Web to communicate through multimedia, including graphics, video and sound. Designed with enhanced security code, these software products provided the confidentiality required to execute financial transactions and to sell advertisements on the Internet and private IP networks. PY

The company’s most popular product, Netscape Navigator, was the leading client software program that allowed individual personal computer (PC) users to exchange information and conduct commerce on the Internet. Navigator featured a click-and-point graphical user interface that enabled users to navigate the Internet by manipulating icons and windows rather than by using text commands. With the user-friendly interface as a guide, Navigator offered a variety of Internet functions including Web browsing, file transfers, news group communications, and e-mail.
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The response was overwhelmingly favorable, yet only indicated potential demand. Such potential would not be

3This commission value does not account for the potential exercise of the overallotment option. At 750,000

shares, this option would generate an additional $1,470,000 at $1.96 per share. Clearly, the underwriters would benefit from any demand for shares in excess of the original five million being considered.

Netscape's Initial Public Offering


realized until the orders in the “book” were translated into purchase orders when trading began on the day of the offering. Despite this uncertainty, however, the investment bankers from Morgan
Stanley and H&Q felt confident enough to recommend doubling the offering price proposed in the preliminary prospectus.


The Board Decision



The time had come when Clark and the other Netscape board members had to approve or reject their underwriters’ vote of high confidence. In going over the new valuation of the company, the board struggled to disregard the wild speculation surrounding what had been called the

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