Name : Carl Justine C.

Babao

Enzo Daniel Limpiado

Jenica Bautista

Patrice Bawar

BSA 1-C

DOT COM BUBBLE BURST: NETSCAPE

Background

Netscape is an internet company founded on April of 1994. It is one of the first companies to
capitalize on the emerging World Wide Web or the internet. They offer search engine which is one of
the first at that time. They received many investment from famous banks and institutions on Wall Street.
They have good cooperation with already successful Microsoft as their built-in browser. Netscape
however did not stay alone on the business of World Wide Web, many companies emerge with almost
the same business model and giving the same service. In order to stay ahead of competition they hire
many people and use most of their capital to advertise to stay ahead of everyone. However came 1998
where almost every companies put dot com in their names and hold internet domains as investment.
They listed themselves on NASDAQ even though they have yet to have finished product or even
way to produce profits. In 2000 NASDAQ fell as capital of the companies are all burn up and many are
selling their stocks. This heavily affected Netscape as they cannot escape filing for bankruptcy and being
acquired by AOL and to be never heard again.

The Dot Com Bubble

On late 1990’s many people saw internet as one of new way for people to earn money. Since
many of the hardware and software were already built, they need to find new ventures. Businesses put
“.com” to their names to join in on the fun as many are quickly becoming millionaires within just a year
or less. Many of these companies have their company listed themselves on NASDAQ attracting investors.
Financial institutions are also took interest in it and invested in different startups causing them to have
their share prices to reach the limit. In 1999 to 2000 is the time when companies experienced their peak
in their valuations as NASDAQ composite index rise by 582%. However on March of 2000 Japan had a
recession which lead to Japanese investor selling their stock in American market which cause fall in
stock. In the same month there are also articles about how many of these companies that are publicly
listed to have their capital being dried up, causing panic among investors to quickly sold their stocks
which lead to its fall on NASDAQ reaching -78% on the composite index. Many of these companies filed
for bankruptcy, being merged to other companies or being acquired by different companies.

Questions to ponder

a. How could Netscape escape being bankrupt

b. What are the solutions to be not overinflated in debt?

c. How can they stay competitive in this era?