Dot-Com Bubble Has Burst, Lunacy Continues
The party's over, but the cleanup continues.
What's clear is that even if the bubble deflated quickly, it's messy dealing with a deflated bubble. Sadly, the same lunatics running the asylum during the upswing -- the fairly maligned entrepreneurial-investment banking-venture capital complex -- continue to dispense the pills.Consider the case of Staples (SPLS). Its shareholders filed suit when the office-products retailers tried to buy out its Staples.com unit at a valuation that ensured a healthy return for insiders and the venture capitalists who invested in the dot-com, which never went public. Staples had the misfortune of having filed an IPO for Staples.com, so litigators could get their hands on the dot-com's finances, even though the offering never occurred. Included in the filings were details of what the VCs paid for their stakes. When Staples proposed to pay $7 a share, a premium over the $3.25 Staples.com investors paid, shareholders howled. The insiders subsequently agreed to give up their profits by selling back to Staples their Staples.com shares for their original price. They include Staples CEO Thomas Stemberg as well as directors Robert Nakasone (a former CEO of Toys R Us and one of the first Old Economy guys to screw up a dot-com experiment) and former Massachusetts senatorial candidate Mitt Romney. But Framingham, Mass.-based Staples still plans to pay the other dot-com shareholders about $7 per share for their stake.
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