A new bubble
I don't know what to tell you, except that this definitely smells like bubble 2.0 by now.
$4.1B for Skype?
$770M for MySpace?
And now, $1.6B for YouTube?
I bet you News Corp are smiling now as this sort of makes the money they paid for MySpace look like a great deal. Skype, at least, was generating some cashflow. Scant comfort, of course, since the amounts were negligible. But MySpace and YouTube? I mean, are you serious? What the hell is wrong with the tech world, that people are willing to even try and justify these valuations? This is, of course, all shareholders money they are playing with, but the thing that really raised the flag for me was that the YouTube one was a stock exchange. Oh yes. Now we're getting back to good ol' 1999, where you COULD just as easily spend $5B to buy someone because your company was valued at over $100B even though you were losing money hands over fist on revenues that were an order of magnitude or two less than a mid-sized retailer. Who cares? you paid in stock, and since everything was inflated the way it was, it was nothing more than a funny little game - played on the backs of the poor sods who eventually got fried. It was a microeconomic disaster in the end, but since the tech sector was so well... contained... it really didn't hurt anything else that much (and the Dow's relatively strong performance during the time the Nasdaq got buried is the best indicator of that).
Well, I'm happy for the 67 new millionaires at YouTube (can you believe it? that's how many people worked there when the acquisition was announced). Personally, I'm shaking my head wondering how this is even possible. What set of circumstances allows someone like Google to truly analyze the YouTube acquisition and come to the conclusion that it will generate enough free cash over whatever period of time to justify spending $1.6 BILLION DOLLARS on it. Or eBay to justify spending $4.1 billion on Skype. Or News Corp - NEWS CORP, for heaven's sake - to justify spending almost a BILLION DOLLARS on MySpace. I just don't get it. I wanna smoke what they're smoking. It would sure make my mortgage payment look a lot more bearable.
$4.1B for Skype?
$770M for MySpace?
And now, $1.6B for YouTube?
I bet you News Corp are smiling now as this sort of makes the money they paid for MySpace look like a great deal. Skype, at least, was generating some cashflow. Scant comfort, of course, since the amounts were negligible. But MySpace and YouTube? I mean, are you serious? What the hell is wrong with the tech world, that people are willing to even try and justify these valuations? This is, of course, all shareholders money they are playing with, but the thing that really raised the flag for me was that the YouTube one was a stock exchange. Oh yes. Now we're getting back to good ol' 1999, where you COULD just as easily spend $5B to buy someone because your company was valued at over $100B even though you were losing money hands over fist on revenues that were an order of magnitude or two less than a mid-sized retailer. Who cares? you paid in stock, and since everything was inflated the way it was, it was nothing more than a funny little game - played on the backs of the poor sods who eventually got fried. It was a microeconomic disaster in the end, but since the tech sector was so well... contained... it really didn't hurt anything else that much (and the Dow's relatively strong performance during the time the Nasdaq got buried is the best indicator of that).
Well, I'm happy for the 67 new millionaires at YouTube (can you believe it? that's how many people worked there when the acquisition was announced). Personally, I'm shaking my head wondering how this is even possible. What set of circumstances allows someone like Google to truly analyze the YouTube acquisition and come to the conclusion that it will generate enough free cash over whatever period of time to justify spending $1.6 BILLION DOLLARS on it. Or eBay to justify spending $4.1 billion on Skype. Or News Corp - NEWS CORP, for heaven's sake - to justify spending almost a BILLION DOLLARS on MySpace. I just don't get it. I wanna smoke what they're smoking. It would sure make my mortgage payment look a lot more bearable.
posted by Blinkered at 4:49 PM
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