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Week12 Week12 Presentation Transcript

  • The Dotcom Bubble in California Hiroaki Ohtake s1160041
  • Outline 1. What's Dotcom Bubble? 2. Background of bubble 3. Bubble growth 4. Burst of bubble 5. The bubble brusts 6. Aftermath (In Japan) 7. References
  • What's Dotcom bubble Dotcom bubble is rapid soaring stock of Internet-related companies occurred though 1997-2000. Many IT-related venture have been established, stock prices rose abnormally between 1999-2000, but the bubble was burst in 2001.
  • Background of bubble The year 1995 marked the beginning of a major jump in growth of Internet users, who were seen by companies as potential consumers. As a result, many Internet start-ups were born in the mid to late 1990s. These companies came to be referred to as “dot-coms,” after the .com in many web addresses. Many of these companies engaged in unusual and daring business practices with the hopes of dominating the market. Most engaged in a policy of growth over profit, assuming that if they built up their customer base, their profits would rise as well. Investment of investors focused on these companies.
  • Bubble growth Venture capitalists saw record-setting growth as dot-com companies experienced meteoric rises in their stock prices and therefore moved faster and with less caution than usual, choosing to mitigate the risk by starting many contenders and letting the market decide which would succeed. The low interest rates in 1998–99 helped increase the start-up capital amounts.
  • The bubble bursts Over 1999 and early 2000, the U.S. Federal Reserve increased interest rates six times, and the economy began to lose speed. The dot-com bubble burst, numerically, on Friday, March 10, 2000, when the technology heavy NASDAQ Composite index, peaked at 5,048.62, more than double its value just a year before. April 4, the NASDAQ fell from 4,283 points to 3,649 and rebounded back to 4,223. By 2001, the bubble was deflating at full speed. A majority of the dot-coms ceased trading after burning through their venture capital, many having never made a profit.
  • Aftermath On January 10, 2000, America Online, a favorite of dot-com investors and pioneer of dial-up Internet access, announced plans to merge with Time Warner, the world's largest media company, in the second-largest M&A transaction worldwide. Within two years, boardroom disagreements drove out both of the CEOs who made the deal, and in October 2003 AOL Time Warner dropped "AOL" from its name. The stock market crash of 2000–2002 caused the loss of $5 trillion in the market value of companies from March 2000 to October 2002.
  • Aftermath in Japan Softbank and Yahoo! JAPAN, cyber agent and Rakuten, Livedoor (such as on-the-edge) has flourished as an Internet company. The investment trust product for the catchphrase that invest in U.S. high-tech stocks were made. However, the Japanese economy is sluggish due to the prolonged recession of the post-bubble, IT-related investment was partial, so the impact of the IT bubble collapse with a focus on U.S was very limited in Japan.
  • Conclusion Dot-com bubble seems to be happened by rapid development of the Internet and a change in the society associated with it. Companies of social networking is growing rapidly at present, there is also a direction to capture as dot-com bubble 2.0 these flows.
  • References 1. Dot-com bubble http://en.wikipedia.org/wiki/Dot-com_bubble 2. What was the Dot-com Bubble? http://www.wisegeek.org/what-was-the-dot-com-bubble.htm 3. History of the Internet - the Dotcom bubble http://www.nethistory.info/History%20of%20the% 20Internet/dotcom.html