What Is Netscape Worth?

For you high-tech executives and big-dollar investors, I’ve mentioned Mark Anderson’s electronic Strategic News Service. (For a free month: Markrander@aol.com. Thereafter, $195/year.)

I understand only about 15% of it.

A nugget I grasped a few weeks ago was Mark’s opinion that Netscape — though a loser to Microsoft in the browser wars — had cemented its position as a long-term survivor.

“OK,” I e-mailed him. “So Netscape is here to stay. But how would one value it? The stock market says: $4 billion and change (85 million shares at $50 each). Is that crazy high? Crazy low? About right? I’m as interested in how you’d approach the problem as in your answer (though I’m interested in that, too).”

After all, this guy has pretty exceptional credentials and a self-assessed 100% accuracy rate in all his predictions since Day One, so for my $195 a year (OK: there’s a 50% discount for students and journalists, but still!), I’m thinking: forget the future of telecommunications and social organization and paradigms and discontinuities. Is Netscape a long or a short?

I mean, one could grow quite comfortable after just a few years of 100% accuracy in the stock market. Even 90% would work.

“You have correctly anticipated the first part of my answer,” Mark wrote back. (Well, he doesn’t exactly write back: he publishes your letter and answers it for all to see.) “For most of the technology sector, the P/E is almost irrelevant (see Microsoft), and the company valuation is probably secondary in determining price. I tend not to work on valuations much. My assumption is that people are much more interested in whether the price will go up or down over a specific period of time.”

[Let me interrupt to be sure you’re clear what that means. It means: “Who cares what the stock is worth? These days, that’s not something buyers and sellers look at.” In my experience, that sort of attitude — not to pin it on Mark, he’s right to observe it — but that sort of attitude prevails either when there are ridiculous undervaluations, and everyone’s just too disgusted, depressed and scared to think rationally . . . or else when there are ridiculous OVERvaluations, and everyone’s just giddy.]

“I managed to cause a great amount of good-natured amusement a week ago, in a conversation with a small crowd of Wall St. fund managers. I told them where I thought a particular stock would go over the next year or two, and why. The ‘ringleader’ agreed, laughed, and then, turning to the rest of the group, said: ‘He probably doesn’t even know what the P/E is — or care.’ This seemed to absolutely delight him. He was right on both counts.

“As for Netscape, their recent re-positioning will do them well over the next 12 months. I think their price will continue generally to rise (rebound) over this term, despite the devastation of the coming browser debacle. Thanks for writing in. — Mark”

Well, he’s probably right, but I ain’t buyin’ it.

And now it’s 55.

Tomorrow: OK, Then, How About 400 Pounds of Butter?