Feeds

Qualcomm leads NASDAQ to unprecedented heights

Does the biggest boom since 1928 foreshadow the biggest bust since 1929?

  • alert
  • submit to reddit

The Essential Guide to IT Transformation

The Nasdaq composite index closed above 4,000 points yesterday, only months after amazing analysts by breaking 3,000. This is the result of unprecedented investor optimism over technology stocks, many of which have risen by more than 500 percent this year alone.

By far the largest winner is Qualcomm, whose shares rose $97 to $756 in London this morning, after gaining $156 in New York yesterday. The company's shares are up a spectacular 2,400 percent this year.

Other technology stocks have gained monumentally this year too. Yahoo, Intuit, i2, CMGI and Broadvision have all doubled in the past two months, during the period when the NASDAQ rose from 3,000 to over 4,000. The NASDAQ has risen proportionally more this year than any American index in history.

This is especially surprising when one considers that the majority of issues driving the index have been expanding ahead of profits, and have seen their share values outstripping earnings by a hefty margin. Their high value is purely a function of earnings expectations; while the expectations are purely the product of widespread optimism regarding the Internet's potential to serve one day as some colossal engine of global wealth.

The party can go on indefinitely so long as everyone remains convinced that the Internet is all it's cracked up to be; but if the vast wealth it is supposed to create turns out a disappointment, there will eventually have to be a realistic assessment of the value of companies whose fortunes are tied to it. There is a limit to the faith one can place in a company that produces no real profits. In times of economic stress, one is far more likely to hold shares in a company that creates actual wealth rather than creating the mere expectation of wealth.

To us it all seems a bit mad, really; but since The Register's fortunes are as much tied to the Internet as anyone else's, we can't help wishing that the rest of the world would turn a blind eye to the pitfalls and risks, and join us in a toast to future earnings based on a whole lot of investors declining to ask any very difficult questions. Cheers! ®

Boost IT visibility and business value

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.