Netscape IPO Essay Example | Topics and Well Written Essays - 1750 words

Netscape IPO - Essay Example That Netscape would now be in the dustbin of history, having been demolished by Microsoft during the browser war when it buckled under the killer strategy of Bill Gates’ bundled Windows operating system with the its browser, Internet Explorer and having bought by AOL in March 1999 – many questions still abound on what went wrong, and what could have been avoided. The company was led by both the talented (Marc Andreessen and the experienced manager (Jim Clark) and had the backing of the well-known venture capitalists in Silicon Valley. No less than Morgan Stanley would be the lead underwriters for its IPO. In the end, the dilemma faced by the board of directors of whether to give in its Wall Street underwriters’ proposal of raising the initial stock price form $14 to $28 and increasing the number of shares to 5 million due to favorable response to the investment roadshow or risk a public verdict of opportunism for doing so (Backstrand 7)– was rendered moot and academic. Netscape opened to an overwhelming response from investors who took the stock price to as much as $75 after a delayed opening of $71 per share. On the other hand, the question of whether the investors made a good decision in paying so much for the stock an untested company had to place it in the context of the condition of the industry, Netscape’s company strategy and how IPOs in general fare as investments. ... Condition of the industry: In the mid-nineties, the Internet industry was at the start of its boom period. There were no clear indicators where it would be headed - a condition that had been comparably described when the PC was thought of in the early 1980s when the IPO of Apple Computers mirrored the wildly exuberant public reception of Netscape's IPO (Blodget n.p.). There were various theories of what the Internet would be - some thought that it would be like glamorized surfing of TV shows and those who would be winners in the era would those sites that would offer great design and content (Blodget n.p.). Fast forward to a decade later - the winners would be a search engine called Google, a book seller now an around retailer, Amazon.com and an on-line community of buyers and sellers called ebay.com. Netscape was proclaimed a winner too soon in the game, like Apple was. Though Apple Computers remains as a company today, the big winners of the IPO era of the PC industry were those who entered it later in the phase - as could be seen in Microsoft IPO in 1986 and Dell in 1988 (Blodget n.p.). The Internet community more than ten years ago was miniscule (57 million users according to the International Data Corporation) compared to what it is today, but even by then, it was growing by leaps and bounds. The web browser market in 1994 was dominated by the Mosaic web browser program that was created by Netscape co-founder, the 23-year old Marc Andreessen (Backstrand 3). When Andreesen teamed up with middle-aged Jim Clark, the founder of Silicon Graphics, Netscape successfully set a new industry standard through its Netscape Navigator program and wrestled market leadership from Mosaic. Netscape's share of the market by 2005 was at 75% while Mosaic,