Is Tech Stock Slide A New Dot Com Bubble?
Updated: 1:37pm UK, Tuesday 08 April 2014
By Tom Cheshire, Technology Correspondent
Ouch: Tech stocks are taking a beating.
Let me bombard you with some bad figures.
Companies including Twitter, Amazon, Facebook, LinkedIn and Netflix have lost at least 20% of their value from their 2014 high.
Between them, Facebook and Google have lost £28.5bn in their market capitalisation.
The recent stock market flotation of King.com - the makers of Candy Crush - was the worst IPO debut this year.
On the other side of the world, Samsung cut its January to March profit forecast by 4.3%, and dropped the price of its new flagship S5 phone.
Meanwhile, Chinese internet giant Tencent has lost a fifth of its value.
Is this a new technology bubble - and is it bursting?
Technology stocks are still well below the valuations at the height of the first bubble in 2000.
The internet has become part of everyone's lives, rather than an early adopter's toy: 479 million people were online in June 2001; today, around three billion are.
The companies going to IPO are not offering vague promises, but solid profits: King.com had pure profit of $568m (£340m) in 2014.
And sure, Twitter might not make a profit yet - but neither did Facebook and Google when they had their IPOs.
Now both companies earn more money than they know what to do with.
That may have pushed prices higher.
The supermarket sweeps of Facebook and Google - spending billions on companies like Whatsapp, Oculus Rift and Nest - certainly drove up prices, but both Silicon Valley giants could easily afford the cost.
Investors have to be more circumspect.
What we're seeing is a re-adjustment - one which has been due for a while.
King.com is an extremely well-run gaming company, but probably did not warrant a $7bn (£4.2bn) valuation.
Investors in stocks like Amazon and Netflix were waiting and hoping on higher earnings reports: when these were published in February and March, they've been shifting their money to less expensively valued companies.
But this is good news. Investors are treating tech like proper stocks, rather than the magic beans they did back in 2000.
Technology analysts Oppenheimer & Co actually say that, as a result, the sector is now an opportunity.
This is a bump, rather than a bubble.
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