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The Internet Businesses The Almighty Buck

Another Dot-com Boom? 253

Posted by timothy from the buy-lnux-please dept.
Ryan Hemelaar writes "CNN Money is reporting that the internet might be at a stage of another dot-com boom, with the top tech stocks now gaining ground again after the dot-com crash. From the article: "Now, 10 years after two key events in the history of the Internet -- the successful IPO of Netscape, which many cite as the beginning of Wall Street's love affair with 'Net stocks, and the founding of Yahoo! -- we're in the midst of a new, let's say mini dot-com boom.""
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Another Dot-com Boom? More

Another Dot-com Boom?

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  • Buy, buy, buy!! (Score:5, Funny)

    by Anonymous Coward on Tuesday June 14, 2005 @08:18AM (#12811499)
    There's no end in sight!

  • Google's IPO (Score:5, Insightful)

    by metlin ( 258108 ) * on Tuesday June 14, 2005 @08:20AM (#12811505) Journal

    Not to mention Google's IPO today, which has been valued quite highly.

    Google is a great company with some really good services, but where does their core revenue come from, other than ads and maybe sales of their few SE boxes?

    Makes you wonder, once again. Remember - it does not matter if you have the greatest idea on Earth, if your revenue is not from tangible assets (for relative measures of tangible ofcourse), the market will put you down eventually.

    This is what I'm scared of - if things like that do happen, we'll once again go into an IT industry crash. :-/

    • Google. (Score:3, Insightful)

      by glrotate ( 300695 )
      Look at that PE. Do the fools never learn?

    • $78,540,000,000 (Score:5, Funny)

      by bigtallmofo ( 695287 ) on Tuesday June 14, 2005 @08:37AM (#12811584)
      Blasphemy! How dare you suggest that Google might not be worth nearly EIGHTY BILLION DOLLARS. That's its current market capitalization.

      How does that compare to other companies?

      Oracle: 64.78 billion
      3M: 58.56 billion
      American Express: 68.43 billion
      Disney: 57.82 billion
      General Motors: 19.48 billion
      Red Hat: 2.2 billion

      Anyone that suggests that a brand new company like Google shouldn't be worth 4x more than General Motors just isn't thinking correctly.

      • Where does google's income come from, exactly?
        • They have search bots which catalog and index financial websites.

          However, each search result containing financial details, they shave of $0.001 from the details.

          And you say google isn't evil ;)
        • Where does google's income come from, exactly?

          1. Get lots of page views and public attention
          2. ??
          3. Profit!!
          -Eric

      • General Motors: 19.48 billion adjusted for debts (Score:4, Insightful)

        by infonography ( 566403 ) on Tuesday June 14, 2005 @09:00AM (#12811715) Homepage
        GM has a major outbound flows. I was reading how of every car they ship $1600 goes to just Pensions. Their stability is declining. Income from tangibles is all well and dandy, but Google's has next to no materials overhead which tips the scale. Still it's not the income, it's the long term stability. Keeping Google afloat is cheap. If a goose eats $100 bill then it better lay golden eggs and this goose is laying some nice golden eggs. Once last word to the to wise, playing the stocks is like surfing. You ride the wave till it falls. Long term anything in the stock market is a fools game.
        • Long term anything in the stock market is a fools game.

          Let me make a modification for you:

          Long term any single thing in the stock market is a fool's game.

          A balanced portfolio of domestic small-cap, mid-cap and large-cap stocks along with a smattering of international funds and bond funds is the only sure bet long-term. Anything else and you might as well put it all on black at the casino.

          Never mind. I forgot - you're better at picking stocks than everyone else in the world, and your winning strea
        • So? We're talking about 20K plus durable goods here. That also means that at least $1600 of rubber, steel and plastic are also in the finished product. That finished product also reflects the effort required to transform all the raw materials.

          The end result (if it weren't GM) could be useful to you for 10 years or more.

          GM's problem is that they make crap and are more interested in being "better salesmen".

          Bringing up pension costs is just another indication of why the management of GM shouldn't be allowed
      • I understand your point, but using GM as a comparision isn't a good idea. GM is all but bankrupt. Many of the more bearish investors are betting heavily on GM's bankruptcy within a year or so, especially if they cant get the UAW to make some concessions.
      • Anyone that suggests that a brand new company like Google shouldn't be worth 4x more than General Motors just isn't thinking correctly.

        Wow, if you're suggesting that GM be valued more highly than Google, then finance isn't the field for you. GM builds cars and loses money doing it. It has HUGE overhead. It has pension plans and healthcare plans to which it committed during better times. GM is expected to lose $4 billion this year. It has major manufacturing facilities in a country where costs are h
        • Surely you're joking. GM makes STUFF. All it really needs is restructuring to stop the loss of money. In contrast, Google makes NOTHING. And what it does can be duplicated by a large company that puts its mind to it.

          GM is still a huge economic engine, which is currently hobbled enough to stop its power output. Compared to this 350HP beast, you are attempting to compare it to a company (Google) that is the equivalent of a weed-whipper engine that is putting out 1/3hp ... and all because the small eng
          • Well, you're not really backing up your assertions with much. Google makes ad space. People pay for that. GM makes cars. People pay GM less than it costs them to make the car. Companies are WORTH what they make + the value of their assets. Right now, GM is WORTH less than Google. There's no intrinsic value in dollars to ANYTHING. It's completely determined by how much people are willing to pay for it or sell it for, depending on which side of the marketplace you are on. GMs cars are worth jack if n
      • Isn't market capitalisation a representation of what the company if expected to earn in the forthcoming years?

        Given that today people spend more time in front of Internet than in front of TV (in the USA), but that Internet advertising is way lower than TV advertising, it seems normal that companies who base their revenues on Internet advertising be appreciated.

        Google being a leader in the domain, with many many smart guys and ideas coming in, is a little bit hyped but has a strong potential.

        On the other
    • Television stations seem to survive pretty well on ad revenue. The better the coverage, the richer the station is. Advertising in general is an industry that won't go away soon, and the product (a favorable impression in the mind of a customer) has never been tangible anyway. Television integrates their advertising into products such as entertainment and news. Google integrates advertising into the most popular search tool.

      The only thing that can bring Google down is not the tangibility of their assets, bu

      • Re:Google's IPO (Score:3, Interesting)

        by metlin ( 258108 ) *
        You're missing a very vital point - television industry charges money for cable subscription.

        If you want Foo Bar channel, you subscribe to that channel. On top of that, they advertise and make additional revenue.

        On the Internet, you are not paying for the service by the website. The only thing that you ever pay for is your connection, which is quite different from a TV subscription.

        If Google were to be a paid subscription plus had ads, it would be different. It only has ads, and there is only so much rev
        • No, I never said anything about cable. I was referring to broadcast television, which existed before cable. The whole argument can also be transferred to radio.

          Many stations now have ties to larger companies and other industries, but there are independent ones out there too.
        • It only has ads, and there is only so much revenue that you can make out of it.

          Isn't this true about any revenue stream? Advertising revenue has become a staple of our economy over the last 100 or so years. Magazines, broadcast TV, Radio, Newspapers all make their revenue from advertising. Most subscription costs for print media and TV cover production and delivery costs. With any web based service there is very little in the way of actual fixed costs (no printing, no paper) and the ISP costs cover d
      • I agree with you - basically, Google's model isn't so different from other forms of media (TV, radio, magazines, newspapers). They all work the ad market pretty well to get their revenue. I'm sure there are newspapers that have been around for 100 years doing the same thing. However, I think in addition to the points you bring up about linkfarms and blogspammers and such - there's one more liability that Google has - Google is more susceptible to a new entrant into the market eroding their market share.
    • Ah, Google, the hype of the new millenium. I've posted on the valuation of this company, that defies all common sense, a number of times. But what struck a chord back in April was the way the /. readers fawned over and praised the sacrifice made by the egalitarian, visionary leaders who decided to set an example and pay themselves a token salary of only $1 a year, when they could have easily paid themselves much more! As if this makes one iota of difference in their billions (courtesy of the suck^H^H^Hin
    • Makes you wonder, once again. Remember - it does not matter if you have the greatest idea on Earth, if your revenue is not from tangible assets (for relative measures of tangible ofcourse), the market will put you down eventually.

      What do you mean by "tangible assets"? Ads sales is a large source of revenue for companies such as Disney, GM's NBC division, much of Rupert Murdoch's empire, and nearly every magazine and newspaper in the world. So Google is offering a bit more than just ad sales - they are

  • Speculation (Score:4, Insightful)

    by The Original Yama ( 454111 ) <lists.sridhar @ d h a n apalan.com> on Tuesday June 14, 2005 @08:22AM (#12811515) Homepage
    It's this kind of speculation which drove the first dot-com boom... and eventually burst the bubble.

  • With a hopefully smaller burst of the bubble (Score:5, Interesting)

    by ChrisF79 ( 829953 ) on Tuesday June 14, 2005 @08:23AM (#12811522) Homepage
    It will be interesting to see how Wall Street reacts the second time around with these tech stocks. I would hope people can look back now and wonder what they were doing, consistently buying these stocks with P/E ratios of 300 and higher. With the tech bubble of the 90's still fresh in investors' minds, I would speculate that this time it won't get quite so out of hand. The name of the game on Wall Street is earnings, and in my opinion, one of the biggest problems we had with the last tech bubble is that so many of these companies had no earnings to speak of. To make matters worse, I don't know that a lot of these companies (pets.com) had a good idea of how they would ever have earnings. Hopefully the big investors such as pension funds, insurance companies, and mutual fund managers will think twice about backing some of the more obscure companies. Perhaps I should do an understandfinance.com IPO :)
    • I agree. What I would be watching is where the 'smart money' is going. Where are people like Warren Buffett, the hedge fund managers, etc. putting the money they manage?
      • Warren usually buys large private companies. So... Unless you have some sort of an in with him, you wont be able to buy what he buys.

        I remember reading something about the fact that he has trouble deploying the cash he needs to invest, he has so much to deploy -- he cant find enough good deals. kind of crazy.
    • "consistently buying these stocks with P/E ratios of 300 and higher"

      I'd rephrase that a bit. It was so crazy back then that any company with an actual P/E was pretty much frowned upon. The momentum went toward companies showing deals and eyeballs. Even the top-line dollars from the deals didn't matter; any press release with AOL would guarantee a 50-100% jump in market cap (usually in a day). I even customized my PR feed to catch the three letters "AOL" and automatically buy any other ticker in the rel

  • A boom can be dangerous... (Score:4, Informative)

    by Iriel ( 810009 ) on Tuesday June 14, 2005 @08:26AM (#12811536) Homepage
    ...whether it's mini or not in my mind. Hype is what helped cause the legendary dot-bomb, and I'd rather keep my job.

    All credit given to successful internet companies, I don't see it as a boom of any sort, I think of it more like big forecasts for what has actually worked this time around. Google may not continue to rise endlessly in the stock market, but internet companies are doing better in part because the internet is becoming so ubiquitous that you really can't avoid having some tie-in to your website in many industries. I'm glad to see companies coming back from the dot-bomb, but I can't call it a boom or a mini-boom.

    How about a more stable term like 'successful market'? That sounds a little bit safer than over-hyping things again.

  • Reminds me of "Key Largo" (Score:4, Insightful)

    by hey! ( 33014 ) on Tuesday June 14, 2005 @08:26AM (#12811538) Homepage Journal
    The gangsters in the movie are nervously sitting around in the hotel bar waiting for the hurricane to hit. Rocco, who's a tough guy but can't stand the tension, orders one of his underlings to talk. The most cheerful thing the thug can come up with on the spur of the moment: "I think in a coupla years, maybe, they're gonna bring back Prohibition."

  • when it bursts (Score:4, Funny)

    by dioscaido ( 541037 ) on Tuesday June 14, 2005 @08:40AM (#12811607)
    Google should remember to grab as much copper wiring from the walls as possible!

  • Bound to happen (Score:4, Interesting)

    by CastrTroy ( 595695 ) on Tuesday June 14, 2005 @08:42AM (#12811616)
    The internet is a new playing field. It is going to go through a few cycles like this before everything evens out and we get to a stable place. Also, since the bust, there's been a lot of increases in not only technology, but also availability of the internet. There's lots of new stuff to try out. There's going to be a lot of companies that want to try out new things, take a risk, because it could end up meaning big income. Going global on the internet is more possible than with other types of business. I think there's a lot of money to be made, just like the first time around. The good ones will survive, just like the first time around.
  • The internet has matured from ten years ago, with a lot of privately held companies contributing to the present boom.

    Take a look around, the Internet is everywhere. Hundreds of thousands of companies have an online presence. Instant messaging is commonplace, as is online gaming. Newspapers publish online, granted most of those are traded on the stock markets. Internet chat/discussion is more active, we've seen a steady increase over the past 7 years in pageviews to our site, indicitive of an increased us
  • Hopefully people will have learned the mistakes that caused the last great .com implosion and not get the economy trashed yet again.

    Brainless speculation and investment in junk does not an economy bolster.

    At least, not in the long view.

    Not really in the short view either.
  • Bears like to slide a slippery slope of optimism. Bulls like to climb a wall of worry. Personally, I only hear about the impending crash, not that I'm buying anything, I'm just saying...

  • "Boom" or "insanity"? (Score:5, Insightful)

    by ErichTheRed ( 39327 ) on Tuesday June 14, 2005 @09:02AM (#12811730)
    Booms are good. Insane run-ups like the dot-com boom in 1998-2000 are not. I graduated right into it, and ended up working in IT for decidedly non-dotcom companies the entire time. My reasoning: I was learning, so I might as well start with an established company. Turns out that was the right decision, even though it really bothered me watching people I knew changing jobs every 6 months for 30-40% pay increases!

    If you want another example of a bad boom, just look at the housing market lately. I read a statistic the other day that said interest-only mortgages have reached 40% of all loans made in some housing markets. Just wait until interest rates go back up and the interest-only period ends. People will be paying way too much on houses that aren't worth nearly what they bought them for. I see this going on in my area, and I just wonder when the market is going to tank.
    • Agree 100% regarding the housing bubble. The prices are being driven up by interest only mortages, where people are getting much more than they can actually afford. This artificially props up the housing market.

      I'm hanging on to my cash and investing in other areas until the market bursts. (OR alternately, I will buy in an area that isn't experiencing this artificial inflation I'm seeing in the DC area)

      • Here in Baltimore it's kind of different, the city had negative population flow for the past several decades, and only in the last few years has this trend begun to reverse. Sure housing prices have shot up 2-3x in the past 5 years, but many of these are in areas that used to be total dumps and have really turned around and become quite nice. Compared with somewhere like California, where many areas went from already being nice to being super rich, here it's a different story.

        We'll see what happens. I'

        • It's going to be driven by these interest only mortages.... you're not gaining equity so if the value of the home DOES drop, you're sunk. Period. Particularly when the case seems to be that interest only mortages are on houses too far out of the buyer's true ability to pay. I.e. I Only is the only way they could afford the house.

  • Generational lessons relearned (Score:4, Insightful)

    by Kurt Gray ( 935 ) on Tuesday June 14, 2005 @09:04AM (#12811751) Homepage Journal
    Market bubbles seem to occure every 3 generations. The big ones that come to mind are Dot-com, 1929, the railroads, the colonies, ... Dutch tulips... seems every 3 generation(s) that has their savings wiped out and dreams dashed wise up to the chants of "this changes everything", "this market is different", "these properties will only gain value", "these prices will last forever". I think it will be another 50 to 75 years before there is a new buzzword technology and enough new suckers who can't remember the previous crash.
  • First of all- we've had a solid six years of web development since the last boom, and people know a lot more about how to use the Internet for Marketing. Also, the population as a whole is more comfortable with computers as well...

    We wont see a boom like the last one, but we will see more tech companies rising to the top again, but slower than before.
  • A mystery is why long term interest rates, especially US governement bonds, remain low in light of commodity inflation. One suggestion is that as the world is aging, there are huge retirement savings pools looking for investment. Many cultures and institutions around the world are leery of stocks so chase the most reliable bonds around: the US governement. This has the side-effect of fueling mortgages and credit cards for US consumers. Some of this probably fuels US tech stock stock prices too.

    • You are right that there is too much money in the world, and part of the reason for that is that the fed has loaned out trillions and trillions of dollars that went into housing. So the last thing you want to do is invest in bonds, they will crash right along with the dollar when investors figure out that the US likely has more debt than it can ever repay or ever be repaid.
  • from the buy-lnux-please dept

    Note that LNUX is good old VA Software [vasoftware.com], owners of Slashdot and also of this really sad graph [yahoo.com].

  • This is normal s curve (Score:3, Interesting)

    by WindBourne ( 631190 ) on Tuesday June 14, 2005 @09:47AM (#12812163) Journal
    In any new industry, there is always an early adapter phase (the 90's), then a disallusionment period with downward growth, followed by a more stable period with solid growth.

    I expect to see the Linux world doing the same (Redhat, Novell, Mandriva, etc.).
  • Markets will always go up and down, as soon as the press call it a boom everyone jumps on and increases the speed of the up and then what goes up must come down.. economics -101 ;)

  • Boom then good, boom now bad... (Score:3, Interesting)

    by Kjella ( 173770 ) on Tuesday June 14, 2005 @10:06AM (#12812404) Homepage
    ...overall, I'm glad the dotcom boom happened. There was such a massive spending on IT and Internet that really drove online connectivity forward. Sure, it was not financially sound, but I doubt the online world would be where it was today without it (and a round number).

    Now? Good broadband (5-50Mbit) is showing up, everyone and their mother is on the 'net and overall I see competition from OSS which forces Microsoft to innovate. Just recently I read about a county here which that tightly integrated OpenOffice with their archival system, thus saving license fees. One down, 434 to go (which can now use that as a basis) not counting those that already use it for other purposes.

    Now is the time to be investing in making such one-off transitions, not cutting back. Companies have disposible cash now, with XP released in 2001 and being between upgrade cycles. It is either laptops (movable) or thin clients (non-movable). I must admit Microsoft is scoring big on the former, but Linux is coming in hot on the latter. A flop now would only give Microsoft the time to milk the market until Longhorn is ready, because people will run on old systems, not taking either upgrade nor switching costs.

    Kjella
  • If you want to know where all the irrational exuberance is this time, it's not in stocks, it's in realestate.

    People honestly expect property values to continue to grow at double digit rates for the foreseeable future(!), with no regard for what's actually sustainable.


  • Don't forget, the rules have changed. That was the answer for a while when all the pundits on CNBC had been scratching their heads wondering how the run-up could be real and long-term.

  • I want it to be the way it was before the dotcom boom, when people could actually get jobs in this industry.
  • things tend to bounce if they are stale enough and you drop them far enough.
  • This most recent "boom" has nothing to do with technology and everything to do with housing and debt, which is why the dollar is at a very high risk of collapse like what happened in Asia during the "currency chrises" on steroids times 1000.

    Are there some hot technologies, yes, but there is no way that big money (eg microsoft) is going to invest in p2p networks and Linux. Anyhow, with the last "boom", bubble or not, people created a lot of technology infrastructure that had a lot of long term benefits for

    • Not bad, but I am sure that ol' Al knows a bit more about the economy than you do. Also, please do not say "buy gold and gold stocks." You forget one rule of investment: there is such thing as a secure asset.

  • They're hoping that pr0n goes on the public trading block. Can you imagine the profits?

  • I can see it happening (Score:3, Informative)

    by IGnatius T Foobar ( 4328 ) on Tuesday June 14, 2005 @11:08AM (#12813181) Homepage Journal
    I work in the hosting business [xand.com] and I can tell you, there's definitely something happening. Back in 2001 when the bubble burst, we lost 40% of our customers in a six month period, and then business was downright anemic for a long time. Gradually we've been building up new business by signing more customers whose revenue didn't depend on "dot com" type business. This year, though, it seems that there's another ramp-up happening. Our cabinets are filling up again -- not at the irrationally exhuberant rate that they did in 1999-2000, but at a more careful pace. And customers are being careful with their spending this time; they're only buying the services they need. Lots of colocation this time around instead of more expensive managed hosting, for example. But it's definitely happening.

    Let's hope that this time around, the "Internet economy" can get firmly on its feet.
  • Those who do not learn from history are doomed to repeat it.

  • It's not a boom, it's the bounce off the floor. Look at what sort of companies are being invested in. It's not the 50-100 person startup. It's large 1000+ companies that survived the burst. Investors finally realise "hey, if that company survived, maybe they actually -are- selling something!". Since even those companies got their stock prices harm by the burst, they're largely undervalued. Hence the "mini-boom". Not a boom. Just adjustment.
  • No, let's not.

    It's stupid.
  • Amazon, Google, Yahoo, and eBay are the survivors from the original Dot Bomb Era. They've learned, adapted, and are no longer just examples of the new Internet sector of the economy. They are strong companies in their own right. You can argue about whether Google's valuation is correct, or whether eBay will continue to grow, but these companies are delivering services that people want to use.

    The automobile industry in the United States took off at a rapid clip, and there were dozens of manufacturers in th

  • I've got this Virtual Brooklyn Bridge for sale. Contact my agent in Nigeria, and he'll set you up.
  • Pay attention to what you invest in.

    Learn to read and understand the quarterly reports to make an accurate judgement as to how the company is performing.

    Don't buy 2000 shares of stock just because your friend is doing so.

    Etc...

    You know why it was a boom? Because people saw it as "get rich quick by buying any and all tech"... yeah, not so much.

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