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COMMENT: Wake up and smell the Coff-e

An e-mail newsletter recently carried the headline ‘Dot.coms under threat from bricks and mortar’. Whether it was an indication that life was starting to return to normal, or a symptom of e-mania getting even more out of control, is hard to tell.

It could have been that it was a reflection of a heavy dose of reality – did anyone really think that businesses that have been around for decades, that have tens or even hundreds of millions of pounds of real assets, would just sit around waiting for a bunch of twentysomethings to surf in and steal their markets? Of course, it could be that the e-world has got even more unreal, with the high street’s retaliation being viewed as some sort of upstart intrusion into territory legitimately seized by superhighway e-tailers. But, if so, their recent (mostly downwards) oscillations would have served as a painful reminder of the truth.

It’s curious that the Nasdaq market should have been regarded as having moved into ‘bear’ territory because of a 25% fall from its peak level – curious, because the question that FDs, other senior executives, investors and bankers have been asking hasn’t been whether some of these stocks are 25% or even 50% over-valued, but whether they are over-valued five- or even 50-times. What some regard as the froth on a cappuccino is, in some cases, just the chocolate powder on a cappuccino – there’s still plenty of froth underneath.

The elevation of Martha Lane Fox to the list of the country’s ‘most powerful women’ by Management Today magazine was both predictable and pointless – and probably ought to have been read as a sign that things had gone too far. And yet, in the middle of 1999, Real Business praised, claiming that it was a business that was already worth perhaps as much as £12m – yes, twelve million. Real Business was perhaps nearer the mark than Management Today, given the number of satisfied customers we’ve met so far.

It seems likely that day-traders and other high-tech investors will think just a little more carefully about how to relate stock values to business values in future – and the new emphasis on the B2B sector rather than B2C is a sign that investors are a little more discerning than they were.

Maybe we shouldn’t be too harsh, though: after all, satirical web newspaper The Onion summed up the dot crash with the following spoof quote: ‘So people finally figured out that all that money in Internet stocks is largely imaginary, and that sent the market plummeting? Gee, better not tell them about banks.’

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