2005 Tech Investments - Mortimer, We're Back

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2005 Tech Investments - Mortimer, We're Back

Are we back? Is it true? I have seen the stocks of eBay and Google rocket ever higher and now this, Amazon logged orders at a rate of 32 items per second over the holiday season! This was their busiest Christmas in history. I read about this amazing achievement in the BBC article titled Amazon Trumpets record Christmas.

Yesterday, TMCs newest blogger Al Bredenberg also blogged this story titled Amazon's 10 Years: E-Commerce Revolution Continues. In the entry Al talks about how many people thought Bezos was crazy when the Internet first started out. Now these people are all jumping on the Internet bandwagon.

From an investment standpoint it seems that the Internet stocks that made it to this point for the most part are going to grow and grow. There is obviously more investment coming back into this space as well.

I just wonder when we will know if we reach irrational exuberance again. A glance at the stock prices and valuations of Sirius and XM will tell you that the market seems to have an appetite for high flying tech stocks that dont make profit.

Will it be different this time? I think it may as there is talk about profitability whenever analysts talk of these companies. We now hear about P/E ratios and the other metrics that we didnt mention during the dotcom buildup.

Still one needs to be careful as some bad habits seem to be repeating themselves. For example the whole celebrity endorsement game. Whoopie Goldberg and Donald Trump were just two company pitchmen I remember from the dotcom days (besides of course William Shatner). Last night I saw Dennis Miller pitching NetZero. Are we back to the glory days of celebrity endorsement overkill?

When will we see Britney hawking Lingerie.com or her husband for Walmart.com or Kirsty Allie doing an ediets.com commercial? How about Winona Ryder for Overstock.com? Jaylo could promote Froogle, PeeWee Herman for Netflix, Imelda Marcos for Zappos.com, Michael Jackson for Disney.com, and Jay Leno for Cars.com.

I digress. The point is that there is amazing potential on the Net and it feels like we are back in 1999 but this time the companies are making money in staggering numbers. Are we overvalued now? The answer is probably yes but it seems that high-flying tech stocks demand super-high valuations. This is especially true when you realize that many dotcoms have much lower costs than their brick and mortar counterparts and as such can charge less and dont have to reinvest in new locations to expand market share.

In the VoIP space the future is also bright but there are threats that need to be taken into account such as Skype and Microsoft. These two companies alone can change the face of VoIP. It is too early to tell what impact these companies will have on the market but if you are looking for investment ideas, I point you to my VoIP 2.0 article (PDF). If peering really does take off the way I believe it should, session border controllers focusing on this market will do very well. Vonage and AT&T have tremendous VoIP mindshare at the moment and it will be tough to dislodge them without massive marketing expenditures.

Companies in the SIP and WiFi telephony markets are poised to do exceedingly well and WiMAX service providers will take the world by storm unless they cant get spectrum. This is an issue you dont hear much about but spectrum needs to be allocated in such a way that there is healthy competition. Aside from Skype, Nimcat Networks and Popular Telephony seem to have the p2p VoIP client market sewn up. I expect healthy growth in this space.

There are many more technologies worth discussing so keep reading my blog for future updates and feel free to add your comments.



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