Overhyped, Unprofitable Dot Coms Going Public? Bubble? What Bubble?

from the we've-seen-this-before dept

John Battelle may be right in saying that the talk of a new bubble is overblown, as many of the new firms seem to be doing things in a way that's more sustainable. However, that's certainly not true of all of these firms. We're suddenly seeing a lot of firms that don't have a real business model or any real competitive advantage taking on tons of VC money -- but the real bubble warning signs may be coming in another area: unprofitable firms going public. And, here they come. We chronicled the history (overhyped internet retailer with somewhat infamous founder/CEO, goes public in the boom, goes back private after same founder buys out the shares after the bubble burst using his gains from the initial IPO) of Buy.com earlier this year when they announced plans to go public again, and now it looks like it's finally about to happen. The company filed to go public today, even though it's still unprofitable. Wall Street is waking up to tech IPOs again...

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  • identicon
    Stoned4Life, 18 Nov 2005 @ 8:32pm

    Failure

    And again we'll just sit back and watch them fail. No harm no foul, they're just wasting their money.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 18 Nov 2005 @ 10:22pm

      Re: Failure

      I only hope this doesn't damage legit companies -- such as google. You'd be crazy to say Google is another 'bubble' company -- its balance sheet is as clean as any other company.. cleaner than most.

      I also think its $400+ stock price keeps n00bs out of it anyway -- which is how it should be.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 19 Nov 2005 @ 5:17am

        Re: Failure

        Er, google might have a good balance sheet, but its earnings don't justify that share price. Its all based on this belief that google's growth won't stop for a long long time. Compare profits of google with other companies that it has now passed in market value (after a quick google, google's 3rd quarter profits were : $381m , and for time warner's $897m)

        reply to this | link to this | view in chronology ]

        • identicon
          david, 19 Nov 2005 @ 12:45pm

          Re: Failure

          Well, in my opinion the biggest suggestions for another dot com bubble would be from companies such as www.myspace.com which was purchased earlier this year by Rupert Murdoch's henchmen for a cool 500 million USD. Now what did he get - he got the contact information for 20 million people... um yes thats all he really got. Anyone can set up a friendster-like community and I suspect instead of paying 500 million News Corp should have invested in creating their own community. This was a waste of money.

          Then you look at Verisign who purchased Weblogs for a cool 2.3 million USD. Now that is not half a billion but it is still overvalued.

          Makes me wonder what my company is worth... http://www.easy-visa-usa.com :)

          David

          reply to this | link to this | view in chronology ]

          • identicon
            Micah, 19 Nov 2005 @ 6:45pm

            Re: Failure

            Wow, 500 million for 20million addy's.. that means he paid $25 for each person on myspace..
            Wow.. I could sit on a street corner and buy email addresses off of people for a buck a pop.. Who the hell thought that was a good idea?

            reply to this | link to this | view in chronology ]

            • identicon
              beau, 20 Nov 2005 @ 12:16pm

              Re: Failure

              There is much more information than just email addys taken from Myspace profiles. The database of information on American citizens was publicly available, and if ever there was a person/entity that would use this information to assemble intelligence, it is Murdoch's Fox Empire.

              reply to this | link to this | view in chronology ]

        • identicon
          grumpY!, 19 Nov 2005 @ 2:08pm

          Re: Failure

          GOOG is actually valued lower on a per-share basis for projected earnings against YHOO. current numbers show GOOG at 40x next year's projection per share and YHOO at 50x.

          i have no issue with GOOG having a much higher valuation than TimeWarner. one is a growing company and one is arguably a shrinking one. TW has had a dead business in AOL, major legal liabilities, accounting issues, decay in traditional media and huge overhead.

          reply to this | link to this | view in chronology ]

          • identicon
            Andrew Strasser, 19 Nov 2005 @ 6:17pm

            Re: Failure

            In a way this could be looked at as a failure, but by opening them up they could be generating capital. This also helps those who sell-short stocks. Companies like this could serve as a backbone for those traders who work on a selling short basis. Frankly though, in the long run this generates profit to keep an area of business that's used in some way alive.

            reply to this | link to this | view in chronology ]


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