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The Internet Bubble: Where Are They Now? IBM, AOL Still Stand

Read more articles on Finance and Internet and Investing.

February 22, 2007

Posted by neillevine

About This Editor: I am a writer. Have been writing for other sites, but expect to do most of my future work HERE! My expertise extends from the esoteric such as burning hydrogen to the unpredictability of the stock market and my writing makes me a jack of all trades and exasperated master of none. I have had some influence over national wildfire and water policy and there are hints of a change in energy policy, BUT as Samuel Goldwyn once said, "A verbal promise is not worth the paper it is written on."

         

Once upon a time there was the internet. Then there was the internet mania and, finally, the internet bubble where a lot of less sophisticated investors and allegedly smarter market dabblers learned expensive lessons in investing in stocks.

Many of the companies that were making the most noise such as pets.com with its sock puppet and Netscape, now part of AOL, with its browser, have become financial legends of the sort that they shouldn’t be forgotten but others such as AOL and Yahoo are still around and still in business.  AOLl still has substantial revenues but is undergoing a transition from an internet service provider to a more diversified internet portal as a subsidiary of communications giant, Time Warner, TWX, formerly AOL Time etc.

Then there’s Priceline, PCLN, whose stock chart shows how the bubble worked although it now in the reasonable price earnings ratio of 31 times trailing fiscal year earnings. Presumably it now has more reasonable prospects.

Of course, there’s always IBM which hit a high around $115 a share during the bubble but never went below something in the neighborhood of $55 after the fall. IBM was once the biggest computer manufacturer in the world leading to the sobriquet IBM and the seven dwarfs to describe its competitors such as Sperry, Burroughs (now merged into Unisys, UIS) RCA, General Electric, GE, NCR, Honeywell, HON, and Control Data. Then came the mini computer with Data General and Digital Equipment and the personal computer and now the, gasp, internet. Well, IBM is still around, still the biggest, and still making money although its printer division which was once the biggest typewriter, (translate as antique word processor) company is now Lexmark and its personal computer division is now owned by Lenovo. 

A lot of people like IBM because it is a very well known brand so they feel comfortable with it.  When it hits a new high anyone who owns it is certain to have made money and it pays a dividend.  On the other hand, it has been underperforming the market in recent times and keeping your money in the bank pretty much guarantees a five percent return compared to the risk of a market downturn. 

After the bubble, one fellow I know who felt he would play it safe with internet funds lost fifty percent on a fund investing in safer internet stocks and more than ninety percent on a riskier fund market philosophy. 

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