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IPO.

Singelakronym, yet med olika betydelser och applikationer.

Det kan stå för immateriell rättighetäganderätt. Det kan också stå för Institutoen Portugues de Oncologia eller det portugisiska Oncologyinstitutet som placeras på universitetar av Porto i Portugal. It may probably refer to the Israel Philharmonic Orchestra which is one of the leading symphonic orchestra in Israel and one of the best-performing orchestra around the world.

However, when you are talking about the IPO in the world of finance, it only spells three distinctive words.

Initial public offering.

Initial public offering or referred to by its acronym IPO, is basically the first sale of a company’s common stocks to the public, which is why it is called “company that will go on public”. One of the major reasons why companies go on public is to raise additional capital that will be used to sustain their operational expenses. Although companies undergoing the IPO process must adhere to the heavy legal requirements imposed by the governing laws and authorities, IPO is considered to be an effective method in raising additional capital for a company.

Typically, an IPO process involves several investment banks that will act as the underwriters for the deal. The company will enter an agreement with a lead underwriter that will facilitate the public issuance of their common shares to the public. The issuer (or the company issuing the common shares) must draft a prospectus that will show the details of the company’s background, history, products, operations, industry environment, and other related factors.

Such prospectus will be submitted to the U.S. Securities and Exchange Commission (SEC) for approval. Once approved, the price of the common shares will be finalized, and the IPO will now be on the “free riding period” wherein the shares will be offered to the public in different ways.

In most cases, newly-formed and not well-known companies are the ones involved in the IPO process. However, there are large corporate organizations that go on public to further raise funds to sustain their growing business operation. One of which is the Netscape.

Netscape, or formerly known as the Netscape Communications Corporation, is an American-founded computer application company, which is best known for their Internet-browsing products and services. The Netscape browser was dominant before in terms of usage share. However, with the competition among different browsers, Netscape have lost their user base within that particular area. As a result, the usage share of Netscape browsers is now under 1 percent and still falling slowly.

Netscape went public for the first time in April 1994. They have filed before the Securities and Exchange Commission for an initial public offering of 3.5 million shares of common stocks to the public. After the completion of the IPO process, Netscape were able to grow faster than any other existing software company in terms of revenues. Their initial market value was now around $ 1 billion against the $200 or $300 million of other computer application companies. In addition, they have enough cash to pay for their additional expenditures.

Netscape existed as an independent company from 1994 up to 2003 before they became the subsidiary of the America On Line (AOL). However, the Netscape brand is still in use.

Although the Netscape is now a subsidiary of another large Internet-based company, it showed that through IPO, additional capital to pay for additional expenses and increased market value is a possibility.

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2 Responses to “Initial Public Offering Made Netscape an Internet Browser Giant”

  1. Initial Public Offering Made Netscape an Internet Browser Giant on March 13th, 2008 8:42 am

    […] you are talking about the IPO in the world of finance, it only spells three distinctive words. Read further about "Initial Public Offering Made Netscape an Internet Browser Giant" Filed under Initial Public Offer (IPO) by […]

  2. Netscape’s Initial Public Offering History: Spirit of a Successful Business Entity | Online Options Trading on April 15th, 2008 12:16 am

    […] Firefox web browser, Netscape first dominated the web browsing arena. It was formerly known as the Netscape Communications Corporation that was established in 1994. It offered an extensive line of client and integrated computer […]

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