A Dot-Com Comeback?

Technews.com ^

[GulliverSwift]

By Leslie Walker
Thursday, May 1, 2003; Page E01

You'd think dot-coms had finally connected their dots, considering how they're roaring back to life on Wall Street. Many top Internet stocks have doubled since last year, leading an impressive rally on the Nasdaq Stock Market. But the big picture of Internet business still looks so darn fuzzy that it seems risky to be declaring winners and conceding them their prize money.

Okay, maybe Internet auction giant eBay Inc. deserves an early draw. It's the one Internet business that has turned its dots into neon dollar signs, raking in big profits and virtually vanquishing rivals. But eBay's market valuation has already reached an eye-popping $29 billion. That's $7 billion more than McDonald's, $10 billion more than Ford Motor Co. and a whopping $18 billion more than Best Buy Co.

Equally surprising is the premium investors have bestowed on Amazon.com and Yahoo Inc., the other leading Internet stocks. Yahoo's share price has tripled and Amazon's has more than doubled since bouncing off their lows of last fall. A host of smaller dot-coms have seen their shares rise threefold or more, too, including DVD rental service Netflix and Internet service provider United Online.

This run-up has sparked debate about whether we're witnessing a replay of the 1990s Internet bubble -- one that could pop just as disastrously -- or the end of a three-year bear market.

I don't pretend to know the answer. I doubt it's even knowable given the range of forces that influence the stock market. But I have been poring over first-quarter earnings reports and listening to technology executives talk about their financial results on conference calls recently. Sad to say, I've heard nothing to suggest recovery is imminent in the technology industry or that consumer Internet stocks -- which were first to crash more than three years ago -- are on the verge of go-go growth again.

[GulliverSwift]

whether we're witnessing a replay of the 1990s Internet bubble -- one that could pop just as disastrously -- or the end of a three-year bear market.

If I were a cynic, I would say I hope there's a bubble that lasts until after election 2004. But's that's being cynical. That's all Clinton worried about. He rode all the technology excitement--electronic stuff we're now bored with--all the way until Bush had to worry about the bursting bubble, Clinton's bubble.

[GulliverSwift]

I've never understood how Yahoo can make much money. I don't know how they can be a huge, famous company by just making money off of ads, listing websites, and some e-mail service.

[discostu]

What we're seeing is the companies that actually have a recurring revenue stream (proven by the fact that they survives while others perished) are getting bumps in the stock. This isn't a bubble like the 90s, that was built on the lie of the "new economy" insisting the old rules were dead even though nobody was quite sure what the new rules were, turns out there was no new economy the old rules were alive and well the new rule was the internet hadn't actually changed anything.

[Skip Ripley]

YHOO has done a terrific job of building revenue streams from subscription services. Things like e-mail, dating and other services that were previously free or still free in a reduced format.

They will be around in 10 years. AOL on the other hand...

[Steven W.]

Yahoo is profitable and has been for some time for exactly that reason - all the little pennies they charge for one thing or another do add up to $$$ just like the age-old stories about the programmers' banking algorithms shaving fractions of a penny off millions of financial transactions. That's not to say losers like CMGI or even a new kid like Google could replicate their success because part of the equation with Yahoo is how well their people do what they do with a concerted focus & emphasis on profitability. All three mentioned (plus USAI, which posted blowout numbers again today) are the cream of the crop but far beyond reasonable valuation at this point, if you didn't take advantage of their best pricing when they all bottomed last Summer.

[mattdono]

I don't want to turn this into a debate over search engines, but your undying admiration for Yahoo! must be blunted a little bit by pointing out that Google is THE most powerful search engine available, period.

In addition, Google has a very good business plan. Their search engine technologies and methods are, hands-down, the best available. ANY company would benefit implementing this technology within their company. A company can license Google internally and this is where Google can be the standard in indexing the available materials within a company's web and make buko bucks.

[Revolting cat!]

True, Google has been ahead of the curve. So far. There was a time, remember, when AltaVista had the best search engine and we all know what's happened to them.

[GulliverSwift]

I fear the day when Google sticks up ads. Now it's still perfectly beautiful, with no annoying pictures. At the beginning of Xlinton's tech bubble, people were excited to see how neat their websites could be, how many pictures and graphics. Now it's all just an annoyance, like XXXlinton's presidency.

[Revolting cat!]

Now that you mention it, that was the day that AltaVista went to hell. It looked spartan, just like Google and everybody was telling them "you gotta have a portal", which they finally became. Maybe their timing was wrong - people had to have "content" along with the search engines then, while now we're perfectly happy with "content" being in one place and the search engine in another.

[q_an_a]

very good comment on what most do not see.