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     bubble 2.0

This page considers 'bubble 2.0', valuations seven years after the dot-com crash, with giddiness in investment by hedge and private equity funds and hype about 'web 2.0' (or web 3.0).

     introduction

As of October 2007 notional market values for selected dot-coms and 'old economy' businesses included -

In November 2007 Google's market value climbed to US$219 billion, overtaking Procter & Gamble as the fifth largest corporation on the US stockmarket (behind ExxonMobil, General Electric, Microsoft and AT&T). Google's valuation was ten times greater than ailing metal-basher General Motors and over 30% more than Pfizer. Coca-Cola was valued at US$142 billion; McDonalds at US$70 billion.

China's Alibaba.com had a market valuation of nearly £13 billion at its IPO that month, dwarfing the £19 million in profit it recorded in the first six months of the year.

US venture capitalist Lee Lorenzen gained the requisite 15 minutes of digital fame when reported in the New York Times as suggesting Facebook was worth US$100 billion. A few months later Microsoft's US$55 billion bid for Yahoo! valued its target at 66 times Yahoo's 2007 net earnings. Yahoo! responded that it was worth twice the offer. Microsoft disagreed and the sale went nowhere

In early March 2008 Bear Stearns, the fifth-largest US bank, had a market capitalisation of US$14 billion. By late March - averting preparations for bankruptcy - it had been acquired by JP Morgan Chase for US$236 million in a rescue orchestrated by the Federal Reserve, which provided US$30 billion of special financing to fund Bear Stearns' less liquid assets. Anxiety saw US$300 billion wiped off US equity markets.

The 'Subprime Crash' of 2008 will accelerate the demise of Web 2.0 startups and write-down of enterprises that managed to acquire a rich parent before the market soured. America Online paid a reported US$857 million for social site Bebo in March 2008, writing off US$846 million later in the year. JellyCloud - a repackaging of Claria (in turn a reincarnation of spyware purveyor Gator) raised US$11.5 million in venture funding in April 2008 after gaining US$40 million funding in 2006. Its doors closed in October 2008.






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