Bloomberg the Company

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Follow Us

Industry Products

Magazine

Buoyant or Bubbly?


After online auction giant eBay Inc. reported blowout earnings on Apr. 22, its stock rose 5% the next day. That pushed its forward price-earnings ratio into the nosebleed zone, at 66. The situation is similar for other high-profile dot-coms such as Yahoo! Inc. and Amazon.com Inc. The Goldman Sachs Internet Index has risen more than 30% since the beginning of the year, compared with just 5% for the Standard & Poor's 500-stock index.

Have dot-com stocks gotten ahead of themselves? The answer from most equity analysts is "yes." And that goes for the rest of the tech sector, too -- though to a lesser extent. The Merrill Lynch 100 Technology Index has a forward price-to-earnings ratio of 30, just over the top of its normal range. "It's time for investors to take a breather," says Merrill analyst Zhen-Hong Fan.

We're not facing another tech crash. Many of the industry's stalwarts, such as Microsoft Corp. and Cisco Systems Inc., have p-e ratios in the safe 20s. But watch out for those dot-coms. They're in the high-risk zone. By Steve Hamm


The Aging of Abercrombie & Fitch
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus