Netscape Communications Corp. had the splashiest initial public offering since Boston Chicken Inc., but its executives might prefer comparisons between the two companies stop there.
Netscape, a maker of software for accessing a portion of the Internet, leaped from $28 to as high as $75 on Wednesday, its first trading day on the Nasdaq Stock Market. It closed at $58.25.In early trading Thursday morning, Netscape's shares were down $4.371/2 to $53.871/2.
That price gave the company a market value of $2.05 billion based on 5 million shares issued to the public Wednesday and another 33.1 million shares held by institutions and executives.
Netscape's market value would be close to that of Gateway 2000 Inc. and greater than firms like Broderbund Software Inc.
Boston Chicken pulled off a similar feat when it became publicly traded in November 1993, jumping from $20 as high as $51 on its first day. It soon fell sharply, however, and has been as low as $13.50 in the past year. It closed at $25.25 on Nasdaq Wednesday.
To many investors, Netscape represented the chance to get in at the start of another technology dynasty like Apple Computer Inc., Oracle Corp. or Microsoft Corp.
The company makes a program called Netscape Navigator, which allows people who use personal computers to very simply access and manipulate information on the Internet's World Wide Web.
From a financial standpoint, the company is the fastest software start-up ever. It had $700,000 in sales from its inception in April 1994 through December. During the first six months of this year, sales were $16.6 million and its losses narrowed. Netscape may turn profitable by the end of the year.
However, it may take some time for Netscape's sales and profits to reach a level normally associated with a company worth nearly $2 billion.
"Can one imagine a scenario where the company gets to be big enough to justify a valuation like that? Yes," said Roger McNamee of Integral Capital Partners, a Silicon Valley investment firm. "How many years will that take? That's the question."
Netscape faces several competitors in a market that has had wide attention for a very short time. Few people knew about the World Wide Web a year ago. It is a portion of the Internet where a personal computer owner using Netscape Navigator or a similar product can easily link and locate data on thousands of computers no matter where they are.