Wall Street Wowed By Netscape Initial Public Offering More Than Doubles Price

Netscape Communications Corp. staged one of the most impressive opening acts in the history of the stock market Wednesday, illustrating investors’ confidence in the future of on-line services.

Netscape, which provides software that makes it easy to navigate the Internet, listed its initial public shares at an opening price of $28, but the stock quickly soared to $75 before settling at $58.25.

More than 13.8 million shares of the stock were traded even though Netscape only offered 5 million for sale, indicating many of the original buyers sold to collect profits before the end of the day.

“How crazy was it?” said Andy Brooks, a trader at mutual-fund giant T. Rowe Price Associates Inc. in Baltimore. “Retail investors were swamping our discount brokerage operation with buy orders. They think Netscape could be another Microsoft. We have never gotten anywhere near as many calls as today.”

As small investors rushed in, large institutions, which had been allocated stock Tuesday at the initial offering price of $28 a share, sold for huge profits.

“If you have a 250 percent profit in five minutes what would you do? Keep your money on the table or cash in your chips? Most people who got the stock on the offering (before trading started Wednesday morning) flipped immediately,” said Kathy S. Smith, an analyst at renaissance Capital Corp., which reviews initial public offerings for professional investors.

Netscape’s impressive debut comes amid news that several big companies will soon be providing on-line services.

“Netscape has done an extraordinary job of creating sizzle,” said Allen Weiner, analyst at Dataquest Inc.

Mountain View, Calif.-based Netscape had originally planned to sell 3.5 million shares at $12 to $14 a share.

“The big driver of the stock is that the company’s prospectus had every key phrase: Internet, World Wide Web and technology,” said Paul Meeks, an analyst at Jurika & Voyles, which bought Netscape shares. To be sure, some analysts said Netscape’s prospects are not as bright as its share price implies.

“We aren’t going to know what this stock is going to do for a few weeks,” said Gerard Hallaren, vice president and assistant manager of the technology fund at Invesco Trust Co.

Netscape, founded in April 1994 as a maker of software to navigate the Internet, isn’t expected to make its first profits for at least two years. It had revenue of $16.6 million during the first six months of this year.