What is the reason for loss-making company (Netscape) being valued as high as over $ 1 billion? (Please refer to exhibits 1 and 2 for company fundamentals)

Netscape's Initial Public Offering 296-088 Exhibit 2 Consolidated Balance Sheets for Netscape Communications Corporation December 31, 1994 June 30, 1995 $3,243,510 Assets Cash and short-term equivalents Short-term investments Accounts receivable Other current assets Total current assets Property and equipment, net Deposits and other assets 701,649 67,284 4,012,443 2,447,098 699,100 $7,158,641 $8,868,436 16,567,300 8,277,869 804,971 34,518,576 6,761,045 1,251,582 $42,531,203 Total Assets Liabilities and Stockholders' Equity Accounts payable Accrued compensation and related liabilities Other accrued liabilities Deferred revenues Current portion of long-term obligations Installment notes payable Total current liabilities Long-term obligations Installment notes payable $855,068 527,340 667,503 2,575,145 725,000 $4,607,174 1,075,066 1,897,819 14,963,843 725,000 551,449 23,820,351 725,000 1,511,331 26,056,682 5,350,056 725,000 Total Liabilities 6,075,056 701 451 9,552,278 Preferred stock, $0.0001 par value Common stock, $0.0001 par value Additional paid-in capital Notes receivable from stockholders Deferred compensation Accumulated deficit Accumulated translation adjustment Total Stockholders' Equity Total Liabilities and Stockholders' Equity (8,469,845) 901 1,514 39,683,666 (638,065) (9,812,151) (12,777,561) 16,217 16,474,521 $42,531,203 1,083,585 $7,158,641 296-088 Netscape's Initial Public Offering Exhibit 1 Consolidated Income Statements for Netscape Communications Corporation Inception (April 4 to December 31, 1994) Six Months Ended June 30, 1995 Revenues: Product revenues Service revenues Total Revenues $378,490 317,381 695,871 $15,580,258 1,045,133 16,625,391 114,777 104,313 219,090 1,222,045 513,767 1,735,812 14,889,579 476,781 Cost of Revenues: Cost of product revenues Cost of service revenues Total Cost of Revenues Gross profit Operating Expenses: Research and development Sales and marketing General and administrative Property rights agreement and related charges Total Operating Expenses 2,031,986 2,813,689 1,669,193 2,486,688 9,001,566 Operating loss Interest income Interest expense Net loss (8,524,775) 55,238 (308) $(8,469,845) $(0.26) 32,256,307 6,115,152 9,256,066 3,693,005 500,000 19,564,223 (4,674,644) 495,583 (128,655) $(4,307,716) $(0.13) 33,000,751 Net loss per share Shares used in computing net loss per share Netscape's Initial Public Offering 296-088 Exhibit 2 Consolidated Balance Sheets for Netscape Communications Corporation December 31, 1994 June 30, 1995 $3,243,510 Assets Cash and short-term equivalents Short-term investments Accounts receivable Other current assets Total current assets Property and equipment, net Deposits and other assets 701,649 67,284 4,012,443 2,447,098 699,100 $7,158,641 $8,868,436 16,567,300 8,277,869 804,971 34,518,576 6,761,045 1,251,582 $42,531,203 Total Assets Liabilities and Stockholders' Equity Accounts payable Accrued compensation and related liabilities Other accrued liabilities Deferred revenues Current portion of long-term obligations Installment notes payable Total current liabilities Long-term obligations Installment notes payable $855,068 527,340 667,503 2,575,145 725,000 $4,607,174 1,075,066 1,897,819 14,963,843 725,000 551,449 23,820,351 725,000 1,511,331 26,056,682 5,350,056 725,000 Total Liabilities 6,075,056 701 451 9,552,278 Preferred stock, $0.0001 par value Common stock, $0.0001 par value Additional paid-in capital Notes receivable from stockholders Deferred compensation Accumulated deficit Accumulated translation adjustment Total Stockholders' Equity Total Liabilities and Stockholders' Equity (8,469,845) 901 1,514 39,683,666 (638,065) (9,812,151) (12,777,561) 16,217 16,474,521 $42,531,203 1,083,585 $7,158,641 296-088 Netscape's Initial Public Offering Exhibit 1 Consolidated Income Statements for Netscape Communications Corporation Inception (April 4 to December 31, 1994) Six Months Ended June 30, 1995 Revenues: Product revenues Service revenues Total Revenues $378,490 317,381 695,871 $15,580,258 1,045,133 16,625,391 114,777 104,313 219,090 1,222,045 513,767 1,735,812 14,889,579 476,781 Cost of Revenues: Cost of product revenues Cost of service revenues Total Cost of Revenues Gross profit Operating Expenses: Research and development Sales and marketing General and administrative Property rights agreement and related charges Total Operating Expenses 2,031,986 2,813,689 1,669,193 2,486,688 9,001,566 Operating loss Interest income Interest expense Net loss (8,524,775) 55,238 (308) $(8,469,845) $(0.26) 32,256,307 6,115,152 9,256,066 3,693,005 500,000 19,564,223 (4,674,644) 495,583 (128,655) $(4,307,716) $(0.13) 33,000,751 Net loss per share Shares used in computing net loss per share