This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dot-Com Bubble Has Burst, Lunacy Continues

The unscientific use of the data is what's truly maddening. The high, low, median and mean values of these companies in March suggested a range of valuations for of between $3.33 and $13.69. Staples -- and its two investment bankers, Thomas Weisel Partners and Wit SoundView -- decided that because the "fair value should fall generally below the middle of the range of values yielded by the financial analyses that it reviewed," $7 was as good a price as any.

Oh, meaningless comparables weren't the only key factor in the equation. Another component was the projection of $2.2 billion in sales for in the fiscal year 2005 and net income of $107 million. That contrasts with sales of $512 million in fiscal 2000 and net losses of $82 million. The 2005 estimates assume 20% or better annual sales growth for Staples and its investment bankers think they know how the dot-com will do in 2005. After all of the wrenching change in this market, that's a thing of beauty.

See, the investment bankers like to throw out lots and lots of numbers with fancy explanations. All that data obscure a key point: They're making it all up. The comparables are silly. Webvan won't even exist by the time Staples shareholders vote. But most importantly, the venture capitalists will get paid.

Incidentally, Wal-Mart and Kmart shareholders may never know how Accel Partners (Wal-Mart's partner) and Softbank Venture Capital (Kmart's partner) will make out in their respective buyouts. Neither company is disclosing the terms of its buyback and neither ever made it far enough along to file for an IPO.

Ultimately, this period will be remembered as an expensive experiment rather than a significant business event. "Although Internet operations may, in our opinion, play an important marketing role for broadline retailers and will certainly facilitate certain niche functions such as baby and wedding registry, we continue to doubt that the economics of online selling will conform profitably to a discount model anytime soon," Goldman Sachs analyst George Strachan said to clients Tuesday. "With the likelihood of eventual dot-com spinoffs virtually zero and the added value of third-party advisors now diminished, we believe that Wal-Mart and Kmart are making sensible decisions to gain complete control of their online operations and related trademarks and brands."
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $117.81 -0.19%
FB $105.45 0.04%
GOOG $750.26 0.28%
TSLA $231.61 0.86%
YHOO $32.94 -0.66%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs