Not sure of your point lizking....Do you think that Vulcan Ventures' Bill Savoy could clear up things for us? See below....
Also, for the record, I too wish INSP would get back up....at least to where it was when the merger occurred in October....Wishing doesn't seem to make it so...Here's Savoy's comments .....
Bellevue, Washington, Oct. 20 (Bloomberg) -- Bill Savoy, who
runs the fund created by Microsoft Corp. co-founder Paul G. Allen
to invest in a panoply of innovative technology companies, now
says technology stocks are overvalued.
After three years of gains, a ``bubble'' has emerged in U.S.
stocks as investors bid up shares of companies, particularly
technology firms, above their true worth, said Savoy, 35, who
manages more than $14 billion in Allen's Vulcan Ventures Inc.
``We had an unsustainable set of factors that caused the
bubble to take place in the first place,'' Savoy said in an
interview. ``The bubble manifested itself in the highest growth
companies in the market, and it turned out that most of the high-
growth opportunities were tech-centric.''
Vulcan Ventures, which has invested billions in computer
hardware, software, Internet content and communications
infrastructure companies, has sold its stake in dozens of
investments, and has reduced the pace of new investments, Savoy
said. He predicts the decline in technology shares will continue,
with companies in the wireless communications, optical networking
and business-to-business software sectors falling.
``We are, in my opinion, not anywhere near the bottom yet in
that cycle,'' Savoy said. ``I don't think you can move from
extreme overvalue to fair value; I think you have to go to (being)
undervalued first.''
Selling and Buying
Savoy wouldn't say which companies his fund has bought or
sold, though records of Vulcan's sales have been filed with the
Securities and Exchange Commission. Vulcan Ventures does not
release records of its returns or the size of its investments.
Vulcan Ventures in the past two months has filed to sell
almost 5.6 million shares of InterNAP Network Services Corp., a
company that helps businesses transmit data over the Internet,
including a filing yesterday to sell 2.14 million shares,
according to regulatory filings. Vulcan Ventures owned about 9.47
million shares in February, according to the filings.
InterNAP shares are down 78 percent this year.
Vulcan Ventures for the past 10 years has been investing
billions of Allen's fortune in companies that are developing
hardware, software and content to bring information to consumers
through the computer, cell phone, television and other devices.
Allen is also chairman of Charter Communications Inc., which
operates cable systems in the U.S., and Vulcan Ventures owns
nearly 30 percent of Metricom Inc., which designs wireless
communications networks.
Vulcan Ventures continues to invest in some technology
companies, including a $190 million investment with AT&T Corp.'s
Liberty Media Group in Priceline.com, a company that lets
consumers name their price on goods and services over the
Internet. Priceline shares are down 89 percent this year.
Vulcan Ventures filed in February to sell 1.15 million shares
of Beyond.com, which sells software over the Internet, according
to the Washington Service, which tracks insider stock sales.
Before the sale, Allen was the second-largest shareholder in
Beyond.com, with almost 8 percent of outstanding shares. Those
shares are down 89 percent this year.
Vulcan Ventures also filed in May to sell more than 683,000
shares of Liquid Audio Inc., which allows music to be delivered
over the Internet, according to the Washington Service. Those
shares are down 82 percent this year.
Vulcan Ventures originally paid $3.99 million for 999,803
shares, which works out to about $3.99 a share, according to
documents filed with the SEC.
Several of Vulcan's investments have gone out of business,
including Value America Inc., an Internet retailer that filed for
bankruptcy in August, and Pop.com, an Internet entertainment
company that planned to produce original programming that would be
delivered over the Internet.
Continued Decline
Savoy said that U.S. stock markets rose faster than they
should have because for the past three years events have kept the
U.S. Federal Reserve from raising interest rates.
First, it was the economic crisis that roiled Asia in 1997,
which prevented inflation from rising in the U.S. Then it was the
failure of hedge fund Long Term Capital Management LLC that led
the Fed to keep from raising rates. The third event was the
increased spending by companies on computer systems and software
to prevent the Year 2000 computer glitch, Savoy said.
``In last three years, there's been three specific events
that have taken place in the fall that have caused the Fed to
increase the amount of liquidity,'' Savoy said.
None of those factors are at play today, Savoy said. Now, the
combination of rising energy prices and three successive interest
rate increases by the Federal Reserve will drain money available
to invest in U.S. stocks, he said.
``Now we're pulling it back, because it created inflationary
pressures, and we've tightened,'' Savoy said. ``It's not
surprising to me that after Y2K passed that we had a natural
downward pressure in the equity markets.''
The decline in technology stocks is likely to continue, Savoy
said, with mid-size technology companies with high price-to-
earnings ratios being the next group of stocks to fall, he said.
``Either big-cap technology moves back up, or, probably more
likely, the extremely overvalued companies that trade at huge
multiples of revenue, have to have downward pressure on them,''
Savoy said.
--David Ward in the San Francisco newsroom (415) 912-2995 or
dward@bloomberg.net/pkc |
