Decade past dot-com burst, a new bubble?

Sink or swim: Is another tech bubble on the way, or is social networking truly worth the buzz?

Yesterday, professional network site LinkedIn shares were trading at more than $84. That’s an increase of nearly 100 percent since the company went public on Thursday. Just a few days earlier, Microsoft bought Skype for $8.5 billion.

One short decade after the dot-com bubble, is another bubble in the making? “If there’s a new dotcom bubble, it’s a lot different from the original,” says Harry McCracken, Silicon Valley’s leading blogger. “In the old days, companies went public before they proved they had a viable business, and then went bankrupt when it turned out they didn’t. LinkedIn has been around for eight years, so its IPO is hardly premature, whatever you think of the valuation.”

But don’t expect Silicon Valley’s new dot-com entrepreneurs to collectively imitate LinkedIn. “It’s more likely that they’re acquired by a larger company,”?McCracken predicts. “And here there may well be a bubble effect. Google, Microsoft, Facebook, and others are buying companies for a lot of money. It’s not always clear how they intend to recoup their investments.”

 

In other tech news

IBM surged past old rival Microsoft in market value for the first
time since April 1996, marking the latest twist in the fluctuating
fortunes of two of the world’s most storied
technology companies.

IBM ruled the computer industry for decades until it hired the
tiny, unknown Microsoft to provide an operating system for its new range
of personal computers in the early 1980s.

Bill Gates parlayed that breakthrough into industry dominance,
proving his theory that software would be more valuable than hardware.
reuters

 


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