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peaks and troughs
This page notes peak market values and post-crash troughs
for selected dot-coms.
It covers -
Introduction
As preceding pages have noted, fluctuations in the market
value of enterprises, substantial writeoffs of assets
and the disappearance of businesses are not unusual. The
telecommunication and dotcom bubbles were distinctive
because of the scale of fluctuations (for example short
term losses of 90% following increases of several hundred
percent in share values), multi-billion writedowns by
major telecommunication providers and the disappearance
of major enterprises such as Global Crossing.
Overall the market value of the 280 stocks in the Bloomberg
US Internet Index fell from US$2.948 trillion in March
2000 to US$1.193 trillion in November 2000, down US$1.755
trillion. Of those stocks, 79 declined by 90% or more
from their 52-week high and a further 72 were down 80-89%.
Highlights
Declines among dot-coms include -
- UK
dot-com Izodia peaked in March 2000 with a market value
of £1.7bn, raised £130m a month later but
by mid-2002 was a cash shell with a mere £33m
in its accounts
-
QXL Ricardo had a market value of £2bn in April
2000 but eight months later was worth £62m, slumping
to less than £30m in 2005 before being rebadged
as Tradus and acquired by Naspers
for £946m in December 2007 (30 times EBITDA).
-
DoubleClick, with a market value of $12bn in early 2000
and sales of US$506m in 1999, was acquired by Hellman
& Friedman for US$1.1bn in 2005
- discounter
Priceline.com went from US$94 per share to under US$4
per share during 2000
-
Lastminute.com lost 78% (from its peak market value
of £800m, at a time when it have annual revenue
of £1.5m) in early 2000 to October 2002
- Internet
Capital Group sank from US$212 per share in January
2000 (a market value of US$45bn) to US$11.19 in 2001;
along with CMGI its value declined by US$100bn
-
Yahoo! declined by US$102bn during the course of 2000
and 2001, from US$475 per share in January 2000 to US$8
in September 2001
- About.com
was valued at US$2bn in March 2000, was acquired by
Primedia for US$690m in November of that year and was
bought by the New York Times Co for US$410m in 2005
- Looksmart
went from $5.50 per share in July 2000 to 14.5 cents
in mid 2002
Declines
among equipment providers include -
- Cisco
Systems, which lost US$210bn in market value from its
peak
- an
Intel share cost US$120 in March 2000, declining to
US$16 in 2003
- a
Nortel share went from US$180 to US$3.20 in the same
period, with RIM slumping from US$194 to US$18.04
Declines
among connectivity providers include -
- NTT
DoCoMo saw its value decline by US$180bn between February
2000 and December 2002
- Paul
Allen invested US$1.6bn in US broadband provider Starpower,
subsequently selling 40% of his stock for a mere US$2m
- Deutsche
Telekom shares sank from €100 in March 2000 to
€13.1 in March 2002
- Global
Crossing shares fell from US$65 in February 2000 to
a mere thirty cents in 2002
- Microsoft
invested £1.5 billion in UK cable operator Telewest
in 2000, selling that stake in 2003 for a mere £3
(part of an overall £4.25 billion writedown of
its cable holdings)
- German
telco TelDaFax had a market value of €60 per share
in February 1999 but was worth €1 two years later
-
Teligent filed for chapter 11 in 2001 with debts of
US$1.65bn. Its share price had reached $100 during 2000
-
Viatel lost US$1.6bn in 2000, with a share price of
US$45 in 2000 and US$0.25 in 2002
-
Winstar filed for chapter 11 in April 2001 with total
debts of US$4bn
- PSINet
filed for bankruptcy in 2001 with assets valued at US$2.2bn
and liabilities of US$4.4bn
- the
cost of a 724 Solutions share crashed from US$304.90
in March 2000 to US$0.55 in March 2003
A more comprehensive listing features in John Cassidy's
dot.con: The Greatest Story Ever Sold (New York:
HarperCollins 2002).
exits
Collapses among connectivity providers included
-
- Worldcom
(US$104bn assets )
-
Global Crossing (US$31bn)
- Adelphia
Communications (US$22bn)
-
NTL (US$13bn)
-
XO Communications (US$8bn)
- McLeod
USA (US$5bn)
- Williams
Communications (US$6bn)
-
Asia Global Crossing (US$4bn)
- NorthPoint
Communications (US$800m)
- 360networks
- Metricom
Collapses
of etailers and other dot-coms included -
-
Pets.com
- Clickmango
- Kozmo.com
- Boo.com
- Kibu.com
- Webvan
Infrastructure
revaluations included
- 2002
sale of Qwest's part of KPNQwest (notionally valued
at US$1.3bn) to European carriers such as TeliaSonera
for around US$50m
- sale
of 360networks' transatlantic cable (construction cost
US$850m) for US$18m
- Telstra
writes down interest in REACH cable joint venture from
$965m to zero
IP
and equipment revaluations included -
- JDS
Uniphase US$45bn in July 2001
Other
benchmarks are here.
once more with feeling
History, with apologies to aphorist Santayana, doesn't
repeat itself ... it comes back with a different rhythm.
Looking at hype about Web 2.0
and and increasing churn in private
equity deals from 2005 onwards it is difficult to
escape the conclusion that for some investors, journalists
and promoters the fundamentals have not changed.
In 2006 Google acquired YouTube for US$1.65 billion in
stock; YouTube generated around US$15 million in revenues
in that figure (equivalent to Google paying 100 times
revenue — ie revenue, not earnings — for the
video startup). Such investment has led some critics to
warn of Bubble 2.0, discussed later
in this profile
next page
(the Australian bubble)
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