大象传媒

Is the bubble back?

• Rory Cellan-Jones
• 31 Dec 07, 17:00 GMT

With share prices of two of the world鈥檚 best known technology brands spiraling ever higher 鈥� and a stock market analyst predicting that one of them could triple from its current level 鈥� it feels like 1999 all over again. And we all remember what happened to technology shares in 2000, don鈥檛 we?

Shares in Apple, which traded at around $30 just a couple of years back, ended 2007 flirting with the $200 level. But that is just for starters, according to one investment fund, which is predicting a price of $600 within 18 months, as sales of the iPhone accelerate.

As for Google, its shares are now above or around $700, having been flogged to a grateful public three and a half years ago at $85 apiece. Here is how a Washington Post columnist put it: 鈥淭his price is insane. And anyone buying Google as a long-term investment鈥�. will lose money.鈥�

Only he was writing in 2004 about a price of $109.40.

These are just two outstanding companies, but the general excitement about technology investment is creating a climate where, for instance, Facebook can have a paper value of $15 billion before it has shown it can turn poking into a profitable activity.

So is history repeating itself? Will the bubble burst, leaving investors who believed the only way was up to paper their bathrooms with worthless share certificates?

There is one big difference to the last time irrational exuberance took over, This time, it is (mostly) profitable businesses which are attracting investors. Both Google and Apple have shown that they can generate substantial and growing piles of good old-fashioned cash 鈥� unlike the dot-com dreamers of the late 90s who were convinced that 鈥渆yeballs鈥� were just as good a measure of a business as profits.

Google is already a huge advertising business 鈥� in Britain alone, it promises to overtake the commercial television firm ITV as a revenue earner in 2008. Apple has transformed itself from a niche computer maker with a dwindling market share to a digital media empire, already powerful in music and threatening to disrupt the video and mobile communications industries. So, while investors are making heroic assumptions about continuing growth in both businesses, at least they are dealing with management that has delivered on its promises.

And something else is different. Back in 1999, the price of anything with dot com attached was swollen by a new army of small shareholders. I remember visiting a kind of investors鈥� cyber caf茅 run by one of the new online share dealing services that sprang up in the late 90s. It was packed with eager young men - many apparently working in IT themselves 鈥� who told me they lived and breathed the stock market and were making more money from tech shares than from their day jobs. This time around, the legions of small investors rushing to buy a stake in fillyaboots.com seem to be absent which is probably a good thing.

What is also missing 鈥� in Europe at least 鈥� is a clutch of start-ups making the journey from the back of an envelope to a stock market debut within a couple of years. Europe鈥檚 two most interesting technology start-ups of recent years, Skype and Last.fm, have both fallen gratefully into the hands of American parents (Ebay and CBS respectively) rather than hang on in the hope of an IPO.

So, perhaps this time around the bubble will just gently deflate, rather than burst. Mind you, as that Washington Post columnist found out, forecasting share prices is a mug鈥檚 game. It is quite possible that Google鈥檚 shares will end 2008 above $1000 and Apple鈥檚 will have climbed through $300. You just have to assume that everyone you know will buy an iPhone and that Google will wipe out the rest of the online advertising industry without a peep from the regulators.

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