...Offerings Case: Netscape Initial Public Offering (HBS 9-296-088) Case Questions: Please use the excel sheet I prepared and uploaded on the Blackboard. I inserted already the assumption for your convenience. 1. Why has Netscape been successful to date? What is its strategy? How risky is its current competitive situation? 2. Value Netscape. Use the following assumptions: a. Total cost of revenues stays at 10.4% of total revenues. b. R&D stays at 36.8% of total revenues. c. Other operating expenses decline on a straight-line basis from 81% to 21% percentage of total revenues from 1995 to 2001 so that operating income as a percentage of total revenues is similar to Microsoft's in 2001. d. Capital expenditures decline on a straight-line basis from 45.8% to 10.8% as a percentage of total revenues from 1995 to 2001 so that capital expenditures as a percentage of total revenues is similar to Microsoft's in 2001. e. Property, Plant, and Equipment straight-line depreciate over 10 years. f. Changes in networking capital are essentially zero. g. Long-term steady-state growth of 4% annually after 2005. h. Long-term risk-free rate=6.71%, risk premium=6%, tax rate=34%. 3. How fast does Netscape have to grow on an annual basis over the next 10 years to justify the $28 offer price? 4. What sources of capital other than the public equity markets could be tapped to satisfy these capital needs? 5. What are the advantages and disadvantages of public ownership? 6. Why are many IPOs underpriced?...
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...Advanced Financial Models Example sheet 1 - Michaelmas 2010 Michael Tehranchi Problem 1. In a one-period model, a num´raire asset is called risk-free if its time-1 price e i i is not random: if asset i is risk-free, then S1 = (1 + ri )S0 for a real constant ri > −1, called the risk-free rate of return. Suppose that a market model has at least one risk-free asset. Show that if there is no arbitrage, then the risk-free rate of return is unique, in the sense that if both asset i and asset j are risk-free then ri = rj . Problem 2. (Binomial model) Consider a market with two assets. Asset 0 is a risk-free bond with B0 = 1, and B1 = 1 + r for some constant interest rate r > −1, while asset 1 is a stock with prices S u ? 1 >> >> >> 1−p > > p d for some constant rates of return d < u and a probability 0 < p < 1. Use the definition of arbitrage to show that there is no arbitrage if and only if d < 1 + r < u. When there is no arbitrage, find all equivalent martingale measures Q (relative to asset 0, as usual) and their densities dQ with respect to the objective measure P. dP Problem 3. Consider a two-asset model with prices given by (B, S ) (3, 9) ; ww ww ww ww / (6, 8) (4, 6) GG 1/4 GG GG 1/2 GG# 1/4 (6, 4) Is there arbitrage in this market? If not, find all pricing kernels. Problem 4. Consider a three-asset model with asset 0 cash B0 = B1 = 1 and assets 1 and 2 given by (S (1) , S (2) ) (9, 8) w; ww ww w ...
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... INVESTMENT CASE 2 Netscape’s IPO Group 7 JU Fei LIU Yao LIU Yini WU Tianyi ZHANG Xuehui ZHANG Yiyun 52752084 52815259 52750804 52748187 52700026 52738944 Netscape’s IPO Brief Introduction Netscape Communication Corporation is going to issue its initial public offering in August 9, 1995. It is a young but rapidly growing company which is founded in April 1994 and only operates for 15 months. Netscape is also going through losses and never gain profits. But in the time of rapidly developing of the Internet, Netscape now had succeeded in capturing 75% of the Web browser market by using its most popular product, Netscape Navigator. Netscape has set the industry standard and is the indisputable leader of its kind. Netscape Navigator begun to ship in December 1994. Until then, Netscape did not earn significant product revenues. And Netscape Navigator generated more than half of total revenues for the company in the first two quarters in 1995. The other main source of revenues is generated by Netscape’s server and integrated applications products. In terms of the market share, we can say that Netscape has a promising future by using its excellent Web browser, Netscape Navigator. Another reason for its promising future is the industry background that Internet is in a rapidly developing position. However, Netscape is also facing kinds of competition in every market...
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...the given time, when compared to other internet related IPO's that were around $12-17 per share, doubling the cost doesn't seem justifiable. However, Netscape was hands down, the leader of web browsing at the time with its nearest competitor targeting a different market. We would argue that the internet related IPO's are not directly comparable because of Netscape's popularity already. Additionally, the underwriters had already seen an overwhelming oversubscription causing them to raise the amount of shares offered to 5 million. While we don't have access to the data the underwrites used to come up with their valuation, we found that Netscape must grow at an approximate rate of 56 percent per year to justify a $28 share value. As an executive at Netscape, we believe that we would recognize that possibility to fetch more money than similar internet IPO's did, considering that they were somewhat underpriced and that we are perceived to be the "indisputable leader." This knowledge, coupled with the response from the road show would make us confident in offering at $28 per share. As an investor, obviously we would want to buy at the lowest possible price. Finally, as a manager of an institutional fund, we would definitely be willing to buy and hold at the initial share price of $28 as this market has huge potential and Netscape already has incredible name recognition and are steps ahead of the competition, which is amazing for a company only 16 months...
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...Harvard Business School 9-800-050 Rev. September 30, 1999 Double Dealmaking in the Browser Wars (A) For months, the upstart Netscape Communications Corporation had battled the Microsoft Corporation over which browser the accounting giant KPMG would select for its internal use. On June 2, 1997, Netscape CEO Jim Barksdale finally heard the gratifying words that capped the see-saw dealmaking process: “You've re-won the business,” said Roger Siboni, Deputy Chairman of KPMG. “And I'd like to extend my personal invitation for you to give the keynote speech at our annual meeting in Orlando, Florida.” Delighted at the news, and visualizing the army of KPMG accountants, tax people, and consultants he’d be triumphantly addressing in August, the Netscape CEO thanked Mr. Siboni, and put down the phone. This was a crucial beachhead for Netscape in its quest for the corporate market. Netscape had initially won the KPMG contract, but Microsoft’s persistence had pried it back open. Beating back Microsoft’s latest challenge marked a great success for Netscape. This victory stood in sharp contrast to a far less happy dealmaking episode the previous year in which Netscape had tilted against mighty Microsoft for AOL’s browser business. In a sequence that gave some industry observers virtual whiplash, a pathbreaking Netscape deal with AOL had been announced, only to be undercut the very next day by Microsoft. Netscape’s ultimate loss in the AOL battle helped to define an Internet dealmaking...
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...Stuck on a Microsoft® Office 2010 project? Need a Microsoft Office 2010 skills refresher? Compass can show you the way. What Is Compass? Compass is a searchable database of multimedia tools designed to teach the 50 most essential skills in Microsoft Word, Excel, Access, and PowerPoint. Available on your PC or mobile phone, Compass is an online, at-your-fingertips resource for tech savvy students who need help and answers right away. Where Do I Find Compass? www.myitlab.com/compass How to use Compass Open your web browser and navigate to www.myitlab.com/compass Search for a skill by typing a key word or phrase in the SEARCH box To find a FREQUENTLY SEARCHED SKILL click on View Skill next to the skill you are interested in. The search results display in a concept map, centered on the skill you searched. Each skill you click centers the concept map to show additional skills related to your search. When the skill you are looking for appears in the search results, click on the skill name to launch step-by-step instructions. Click on the VIEW AT A GLANCE or WATCH VIDEO button to see how to execute the skill. RETURN TO MAP will always bring you back to the map where you last left it. Learn more about using the skill in Word, Excel, Access, and PowerPoint, by clicking the OPEN tab in the lower right hand corner of the screen. Click the CLOSE tab when you are finished. To search for another skill, type a key word or phrase in the search box at the top of the screen or click the...
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...branding, and after-sale service. This is what (for example) Red Hat does. 2. Loss Leader: In this model, you give away open-source as a loss-leader and market positioner for closed software. This is what Netscape is doing. 3. Widget Frosting: In this model, a hardware company (for which software is a necessary adjunct but strictly a cost rather than profit center) goes open-source in order to get better drivers and interface tools cheaper. Silicon Graphics, for example, supports and ships Samba. 4. Accessorizing: Selling accessories - books, compatible hardware, complete systems with open-source software pre-installed. It's easy to trivialize this (open-source T-shirts, coffee mugs, Linux penguin dolls) but at least the books and hardware underly some clear successes: O'Reilly Associates, and SSC are among them. The open-source culture's exemplars of commercial success have, so far, been service sellers or loss leaders. Nevertheless, there is good reason to believe that the clearest near-term gains in open-source will be in widget frosting. For widget-makers (such as semiconductor or peripheral-card manufacturers), interface software is not even potentially a revenue source. Therefore the downside of moving to open source is minimal. (Frank Hecker of Netscape proposes more models and discusses them in detail in his paperSetting Up Shop.) There are even, as it turns out, people willing to argue that the open-source model could work well economically for hardware...
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...The Launching of Mozilla Firefox- A Case Study in Community-Led Marketingi Sandeep Krishnamurthy Associate Professor of E-Commerce and Marketing Business Administration Program University of Washington, Bothell Box 358533, 18115 Campus Way NE, Room UW1-233 Bothell, WA 98011-8246 Phone: (425) 352 5229 Fax: (425) 352 5277 E-mail: sandeep@u.washington.edu URL: http://faculty.washington.edu/sandeep Version 1.0 January 27, 2005 Usage Policy 1This is an early draft of the paper. I expect to revise it many times and submit it to an academic journal for publication at a later date. Your input is welcome. You are welcome to use the document in its current form for teaching or research purposes. If you use it in your classroom, e-mail me about how this was received and tell me how I can improve it. Always cite the original document when using. You may cite it asKrishnamurthy, Sandeep (2005), “The Launching of Mozilla Firefox- A Case Study in Community-Led Marketing”, Working Paper, Available at http://opensource.mit.edu/papers/sandeep2.pdf. 4If you notice any errors or omissions in this document or if you have other suggestions for improvement or collaboration, e-mail me at sandeep@u.washington.edu. 2- 3- 2 The Launching of Mozilla Firefox- A Case Study in Community-Led Marketing ABSTRACT Mozilla Firefox is a Free/Libre/Open Source (FLOSS) browser supported by the Mozilla Foundation. This browser was recently released and has met with considerable success- it has...
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...In today’s fast moving world it is important for every company to keep up with the pace of change and be innovative. This job can not be done by just a few people within the company. However companies need the help of everyone, especially the costumers, since they are the one who have the needs and buy or do not buy the product in the end. Useful knowledge is wide spread and hard to get. One possible avenue to collect as many new ideas and suggestions as possible – is to use the concept of Open Innovation. Open Innovations connect external ideas with the knowledge of the internal Research and Development division of a company (Chesbrough, 2003). It is difficult and costly to fully understand the costumers. Open Innovations give the companies a chance to let their customers participate in their innovation process (Thomke & von Hippel, 2002). Open Source is one of the most controversial phenomena of IT-industry nowadays. Confrontation of its supporters and opponents is perhaps the most noticeable trend in the soft world recent years. And it is not surprising because as soon as someone starts to speak about Open Source, the rest remember Microsoft and its products, which are common examples for proving inferiority and inadequacy of proprietary software (i.e. programs with closed-source) (Sharma, Sugumaran, & Rajagopalan, 2002). Open Source is a method of programs’ development and licensing, in which everyone is entitled to a free application use or sale...
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...for you to download. You can use someone's paper from across the country and not have to worry about the teacher recognizing the piece of writing. If you want to compose your own paper, the Internet also makes it easier to cut and paste information; you do not even have to retype the text. The joy of the Internet is that your spliced paper can come from all over the world and be virtually untraceable. There are many different ways that you can ACCESS THE INTERNET and the World Wide Web. If you do not have a computer with a modem at home, you can use one at school, work, or the local library. Computers that provide web access have even sprung up in local malls. You may have the option of a text based system or a graphic browser such as Netscape Navigator or Microsoft Internet Explorer. Once you are connected to the Internet, you should use a search engine to locate information on your topic. The most important thing you can do to conduct a successful search is to compose exact searches. Spend time wording your search and use boolean arguments (i.e. and, or, not) to limit or expand your search. The best place to start is with Infoseek Ultra. If nothing relevant turns up use a metasearch site, such as all4one or MetaCrawler, which engage several search engines at the same time. If you do not have a topic or if you came up blank on your topic search, you should next check out the Evil House of Cheat. It is a searchable database of over 1200 categorized essays. This site freely...
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...directions carefully and write JavaScript code that addresses the requirements. Copy your code directly into the Appendix document and then post to your Individual forum. 1. Write JavaScript code that anticipates and handles an error for an expected numeric field. This code is executed on keypress and the entered value is saved for you in a variable called enteredChar. Include the try block of JavaScript statements needed to check if the character is not a number or a non-alphanumeric character or if you throw an error message. Error Handling function handleError(keyPressEvent) { var enteredKey; if (navigator.appName == "Microsoft Internet Explorer") enteredKey = keyPressEvent.keyCode; else if (navigator.appName == "Netscape") enteredKey = keyPressEvent.charCode; var enteredChar = String.fromCharCode(enteredKey); var allowChar = true; try { if ( isNaN(enteredChar)) { throw "You did not enter a numeric value."; allowChar = false; } } catch( error) { window.alert(error); return allowChar; } finally { return allowChar; } } Error Handling in Java Script 2. Write a custom error handling JavaScript function called processErrors that handles a custom error by assigning it to the onerror event handler. Include the block of JavaScript statements needed to pass the arguments sent by the JavaScript interpreter into the processErrors function, send an alert message with the agreements, return, and write the event handler that calls the...
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...My paper will attempt to show three marketing opportunities and how these opportunities will affect the firm’s finances, public relations and the reasoning why the firms should pursue my suggestions. Dmoz is currently the only search engine with all human editors. Given that fact, they have managed to index 3.5 million page with over 400,000 categories. Dmoz is unique because each site that is submitted must be reviewed by an actual human before it will appear in the listing. While it may seem “old-fashioned” to some, the result is a highly reliable index of only legitimate, properly categorized sites. Dmoz's directory structure is very hard, if not impossible to fool. In fact, although submitting sites are permitted to select certain categories, the human editors may place the site elsewhere if they believe it to be a better fit. This gives searchers the confidence that they will find what they are actually looking for when they enter a certain category (http://www.search-engine-site.net/dmoz.html) AltaVista, as an Overture company, seems to use a very similar algorithm and spidering process as Yahoo. However, there are a few ways in which AltaVista sets itself apart. AltaVista provides the most obvious advantage to those conducting specific multimedia searches. Directly above the search field are a number of tabs (Images, MP3/Audio, Video, etc.) that allow the user to search for files as well as webpages. (http://www.search-engine-site.net/AltaVista.html) Teoma was developed...
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...The first and most significant accomplishment in my career is my initiative of a modification in the designing of a project and its work-flow which saved the life of a dying product. In early phases of my career, I was hired as Software developer by a startup company. Six months into my first project, I got to know that the marketing team was struggling to get a prospective buyer of that product. Company decided to terminate the development, as they had some big projects lined up and decided to divert all its focus and energy towards them. It was a small company with around 20 personnel, so did not follow all the professional courtesies that one may imagine in an enterprise. A good example may be, that company decisions were announced on the lunch table. This being my first professional project, I got emotionally attached to it at a certain level. I could not see it dying. In a meeting with the CEO, when informed about the halting of the project for a few months, I suggested to launch this product as open web portal till the time we get a potential buyer for it. As launching it would not require much additional investment and resources, since only the interface of application had to be changed according to web portal, he decided to give it a thought. Meanwhile I was shifted to another project. Though I started working on another project, the idea of a web portal was still at the back of my mind. I started working on designing the User Interface for web portal after office hours...
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...Essay The World Is Flat is an international bestselling book by Thomas Friedman that analyzes globalization, primarily in the early 21st century. The title is a metaphor for viewing the world as a level playing field in terms of commerce, where all competitors have an equal opportunity. Globalization became more prominent during the last decades. Friedman argues that globalization made the world smaller and flatter, allowing all countries to take chance of the available opportunities equally. As Friedman describes in “The World is Flat” there are three eras of globalization and ten flatteners which made the world smaller, making it easier to communicate and share our knowledge. This paper deals with the flattener number 2 i.e.; “When the NetScape went Public” and associated developments after 2003 till date. Background Thomas Lauren Friedman is an American journalist, columnist and author and has won the Pulitzer Prize three times. In his famous book “The World is Flat” he identifies three eras of globalization. The first era, called "Globalization 1.0",between the years 1492, when Columbus set out to discover a new trade route to the New World, and 1800, made the world fall in size from large to medium. During this period, the strength of a country was based on the number of horsepower or the number of steam engines owned, compared with other countries. The second period - "Globalization 2.0", between the years 1800 and 2000, decreased the size of the world, from medium to...
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...All of my comparisons are limited due to the fact that during this SLP I was forced to switch to a government laptop that I was unable to download browsers to. My primary personal browser is Google Chrome. I choice to use this browser after it was introduced to me by a friend several years ago. I appreciate the simplicity of it and it’s functionality. However, upgrades over the years have changed the interface considerably and made certain things like internet options hard to locate at times. I have had minor issues with the browser seeming to crash however, it is hard to tell if it is the browser itself or the computer that is causing the problems. I have an appreciation for the fact that I am able to identify multiple home pages and every I open up the browser all of the pertinent pages are immediately available for me to access. Overall, Chrome has been a great browser with only minor issues. At work I use Internet Explorer. I have found no issues with this browser and believe the only reason I don’t use it personally is for a change of scenery. Explorer seems to offer all of the same functions that Chrome has as well as the occasional crash. Because the Air Force remains loyal to Microsoft, the one plus to Explorer is that it is the only browser that will operate all of the online applications that the Air Force requires we use. Other than this minor detail, I have found no difference in the functionality. Another browser that I’ve been able to experiment...
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