>when the "I" shut them down.
It was the lack of real "E" that shut them down. And that's going to stop anytime soon.
Btw
You can't focus on stock price, you've got to focus on the future!
From todays Seattle times.
>Seattle Times business columnist
On the first of March last year, Onvia.com went public, then the latest in the string of dot-com companies that was taking the stock market by storm. Onvia was poised to leap into the fray in the business-to-business segment of the online industry.
The company opened sale of its stock at $21 a share and zoomed upward the next day to $78 a share. On March 10, when the Nasdaq Stock Market hit a record 5,048.62, Onvia was trading at $48.06 a share, more than double its offering price.
Today Onvia barely registers on the stock-market radar screens, trading at about 66 cents a share. It has fallen so low it runs the danger of being delisted from the exchange.
As the Nasdaq passes one year of declining fortunes - it closed Friday at 2,052.78, down 59.3 percent from its peak - market pundits keep lowering the bar to measure the bottom of the tech slide. First it was a Nasdaq at 2,500, then 2,000; now, maybe 1,800? Investors still holding on to technology issues are left to wonder when a meaningful recovery may occur, if at all.
What is the Nasdaq?
The Nasdaq Stock Market is the nation's second-largest securities market, after the New York Stock Exchange. Nasdaq, which stands for National Association of Securities Dealers Automated Quotation system, was created in 1971 as an all-electronic rival to the NYSE.
Unlike at the NYSE, where shares are traded in person on the exchange floor, Nasdaq shares are traded among brokerages linked nationwide by computers.
In its early years companies that couldn't meet the listing standards of the more prestigious NYSE were listed on the Nasdaq. But as the U.S. technology industry soared in size and scope in the 1980s and 1990s, Nasdaq became the premier address for those stocks.
The Nasdaq composite stock index tracks all 4,100 Nasdaq-listed stocks, many of which aren't in the tech business.
But the biggest firms in the index - mostly tech giants - have the greatest effect on its value. As those shares, including Microsoft, Cisco Systems, Dell Computer and Intel, rocketed in 1998, 1999 and early 2000 amid investors' excitement over the Internet and tech's growth potential, they lifted the index from 1,570 at year-end 1997 to a peak of 5,048.62 last March 10, for a 221 percent gain.
By contrast, the Dow industrial average rose 26 percent in that period.
In historical terms, Nasdaq's collapse is one of the worst ever for a broad-based stock index, but it has similarities and differences with past market squalls.
The blue-chip Standard & Poor's 500 index fell 48 percent in the brutal 1973-74 bear market, the worst since the Depression. Nasdaq sank 60 percent in 1973-74, but the index was only 3 years old and was loaded with small companies.
After the 1973-74 plunge, it took the S&P seven years to climb back to its peak.
In the crash of 1929-32, the Dow Jones industrial average plunged 89 percent and took 25 years to regain the losses. Many technology stocks today have recorded losses of that magnitude or more. Whether it takes 25 years for the companies to come back remains to be seen.
March last year was a giddy time for the market. The day before the record high, Nasdaq had passed 5,000 for the first time, a gain of more than 1,000 percent for the decade of the 1990s.
Companies were going public in droves. The public was pumping money into the market at record rates.
More than $51 billion new cash flowed into mutual funds in February 2000, most of it into growth funds heavily invested in those Internet stocks.
Trading was very volatile. Of 23 trading days last March, 10 have changes of more than 100 points on the Dow average, six of them more than 200 points. The market was down 374.47 on March 8, up 499.19 on March 16.
By the end of March, confidence was shaken but still strong. It wasn't until a month later that the bottom fell out of the market.
On Friday, April 14, the Dow lost 618 points, the biggest drop since the 1987 crash. The Nasdaq came apart at the seams, losing 355.51 points or more than 10 percent of its value in a single day.
Now, a year later, Nasdaq has shriveled and, perhaps with it, investors' infatuation with stocks.
Their love affair with stocks is waning, as cocktail-party boasting about slam-dunk stock picks gives way to confidential whispers about who was just laid off. Big-ticket spending is tapering off as many think twice before parting with cash or adding to their already-heavy debt loads.
In a recent forecast for the state economy, experts estimate software wages will be $2.77 billion lower this year compared with last year, driven down by fewer workers exercising options driven down in value by the fall in Microsoft stock.
A decade of market gains and a shift by companies to employee-directed retirement savings accounts pushed the percentage of U.S. households owning stock in 2000 to an estimated 52 percent of all households. About a third of households owned stock in 1989, according to Federal Reserve estimates.
Investors, many of them new to the market, who put money into companies such as Onvia, InfoSpace, Avenue A, drugstore.com and Amazon.com have seen the value of their holdings all but disappear.
Ironically, investors in the old economy - Boeing, Paccar, stodgy thrifts like Washington Mutual - have done much better. Onvia is luckier than many of the Nasdaq's dot-coms. It is still in business, closing a deal last week to acquire a similar company that does Internet business with governments. It has cash to keep it afloat for now and dreams of one day turning a profit.
From peak to valley, Onvia has lost 98.94 percent of its value. Glenn Ballman, the company's 29-year-old chief executive, saw his fortune go from $626 million at its height to $6.6 million today.
Onvia's a much smaller operation these days. It has leased out a floor in its headquarters on Mercer Street. Its remaining open-office-concept space is about half used, with many desks empty.
The company and its 500 stockholders are coming to grips with the idea that the New Economy may not be all that different after all, and that stocks that go down don't always come back up, at least not right away.
"In a year we did four acquisitions, four quarterly reports and two layoffs," said Gretchen Sorensen, vice president for corporate affairs. "That's more than many companies do in a lifetime."
Will tech stocks come back soon? Unlikely, say the experts, because many of the reasons driving the growth in sales and profits for such companies during the late 1990s no longer exist. The telecom and Web infrastructure buildup was too much, too soon.
The robust economic growth that investors assumed would go on forever is close to stalling despite two interest-rate cuts by the Federal Reserve in January. The government's revised estimate for U.S. growth in the fourth quarter of 1.1 percent was the weakest in more than five years.
And the dot-com explosion, which stoked demand for more equipment to build it, has collapsed as companies that were supposed to change the way people do business failed to make money. Without profit growth, investors have little incentive to buy technology stocks.
At Onvia, the company continues to refine its focus of helping small business. It acquired DemandStar.com last week, giving it a greater presence in the business-to-government market.
On Tuesday it will hold a telephone conference with analysts, providing them with information about where the company sees itself in the months ahead.
Onvia stock closed on Friday at 84 cents a share, up 9 cents.
"You can't focus on the stock price," said Sorensen, the senior vice president. "You've got to focus on the future." |
