dotConomy or just dotCon?
Disclaimer: There are stock charts in this article, however I reserve the right to totally fabricate any and all facts, and to distort reality regarding the stock market however I feel. I reserve the right to incorrectly state values, and to chart fantasy graphs based on totally bogus numbers that I
got from the voices in my head. The point of this disclaimer is this: This article is not investment advice, and the
numbers in it are conjecture related to the market as a whole and how it relates to software developers/IT, rather than individually recommending specific companies. If you are an investor looking for
investment advice please head to a more appropriate site such as http://www.fool.com. This article is presented as an
opinion piece and nothing more. If you believe something to be factually inaccurate please write to articles@yafla.com
with the details and we will try to correct it as soon as possible.
The media has their latest mantra: blasting gloom and doom into people's homes every night by proclaiming each drop in the stock market as a new nail in the coffin of the "new economy". Already people are putting
off buying a new house, or a new car, lest the world come to an end because Yahoo has dropped over the past year.
The more direct consequence for those of
us in the software development/IT field is hundreds of young .COMs are closing shop because of grossly unrealistic growth goals and overhead weighing them down (or a business plan that was purely designed to GET RICH QUICK on an IPO with no possible long term viability) and this is putting tens of thousands of software developers and IT workers out of work. This naturally puts downward pressure on the salary range of our field,
not to mention the direct effect on the people who worked at the now defunct firms. With that in mind
let's go into a little backgrounder regarding the ".COM crash": If it was
predictable, and where we can go from here. This is important because
as software developers many of us are partially reimbursed by stock
options, many of us sought jobs specifically because the firm touted itself as "pre-IPO", and many of us saw thousands or even millions of dollars of potential wealth
disappear. More importantly though the health of our field, the environment we work in, and the immediate future of the Internet, is at
stake. Of course we may be beyond the point of no return for the near future, with nothing to do but to helplessly look on, but it's important for us to analyze what happened,
why it happened, and how to recognize it when it happens again because sadly it will happen again.
No I'm not saying that the DEATH OF THE INTERNET IS IMMINENT. However there are a
lot of potential advances on the Internet in regards to application providers,
infrastructure (speeding it up, IPv6, etc), and services that rely on faith in
the basic commercial viability of the Internet to be rolled out en mass: I for one am fantastically happy that I can get support and
shop online conveniently, and that it has pushed the infrastructure such that many of us have faster than T1 connections for less than $40 a month. If we stand idly by while naysayers pout about the failure of the .COM world we endanger the
viability of the Internet over the short term.
Let's take a look at a couple of basic graphs demonstrating the 7-day average closing stock price of a couple of well known .COMs (a 7 day average smoothes the trend to get
a better feel for the dollar movement without distracting daily runups and declines, and as a side benefit it makes for a more compressible PNG file).
These were created by grabbing the info from http://quotes.nasdaq.com/ (YHOO in this example),
importing it as a space delimited document into Excel, and then creating some
pretty basic line graphs. I suppose I could have imported
the information into a database and dynamically create them on the fly (better yet I could create an application provider serving up market price XML documents, and on the client end do XSLT transformations...because that's the big thing and after doing that I can get ready for the IPO
and perhaps even go get several "XML Serving of market data with a 7-day average" patents), but that seems rather wasteful don't you think? Then why did you even propose it?
This is purely for overall market analysis and doesn't reflect particular evaluations of specific equities (again this is not investment advice).
~88.8% drop from January 3rd, 2000 to February 20th, 2001
~77% drop from January 3rd, 2000 to February 20th, 2001
~77% drop from January 3rd, 2000 to February 20th, 2001
~77% drop from January 3rd, 2000 to February 20th, 2001
In general these stocks are now floating significantly below their "value" at the beginning of 2000 (not even considering that some of them were significantly higher shortly after or shortly before),
making billions upon billions of dollars of
paper value disappear into the ethereal world from which it came. To put that into perspective, for .COM stocks these are actually some of the healthiest
among their peers! There were numerous .COM bankruptcy that turned the stock certificates into expensive, poor quality toilet paper, and of the surviving .COMs many are clinging to life and
being traded over the counter having been delisted from the major exchanges, often at partial fractions of what they were going for.
Next : So it really is a .COM crash then?