Cybercrash

The name of the site ends with a .co.uk so there has to be something about the London market.

eBookers has hit trouble again

http://www.guardian.co.uk/business/story/0,3604,1271268,00.html

Lastminute is probably better known. Make your own mind up. The charts at Bigcharts and some news for the name UK:LMC

Meanwhile holidays next week but there will be more on the echo bubble and cybercrash later.

Larry Elliott has slipped a wild generalisation into an article today

"In Bill Clinton's second term America had its own version of the South Sea bubble; share prices for worthless IT companies soared"

http://www.guardian.co.uk/business/story/0,3604,1272634,00.html

Not all the IT companies were worthless. ( Possibly some of the UK ones were more marketing speculation than a technology investment) Whatever, the actual values and potential of web technology is the subject for future study.

Something strange is happening with the Amazon share price. My impression is that some people expect Amazon to behave like a normal company in stable conditions. The investment is based on an expectation about the future, when the web and has changed many aspects of the economy, especially retail.

John Paczkowski reported on Friday in 'Good Morning Silicon Valley' that Amazon posted 'its fourth consecutive quarterly profit' but this fell short of expectations which sent shares 'tumbling by 7 percent'.

So the expectations seem to be of continued or stable growth. Amazon is till investing in expanding international sites to include a wider range of products. It is not guaranteed that all costs will be covered at this stage. It is not a good sign for the future level of the shares if there are still many people expecting early profits rather than earnings growth.

Looking at the Amazon chart on Bigcharts, it could fit the pattern of an 'echo bubble' if there is a further decline.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=amzn&sid=0&o_symb=amzn&freq=2&time=12

This would get back to a situation that raises the question of what a cybercrash is about. Such a crash would be over several years, not just 2000/2001. Probably it would be wider and involve financial patterns as well.

The long term aspects are now definitely more interesting. Amazon remains an indication of what a future web economy could be like. This is the main idea to hang on to.

By the way, efforts will be made to improve the links to Amazon from the Cybercrash site and others I work on. Enough speculation. This could be a time for avoiding danger and establishing some sort of base.

The numbers at Bigcharts for the end of the week are

1,946.33 nasdaq

1,112.81 spx

So these are both below the levels mentioned in the previous post. so there could be further declines.

I still think the main point of the cybercrash site is to look at the long term effect on the economy so future postings will bemore about this.

I bought a Finacial Times yesterday. Usually I read the Guardian but I thought I would do some reading before updating this.

Michael Morgan writes that 'traders sit out the calm before the storm', at least that was the headline. Apparently Rick Bensignor at Morgan Stanley has suggested a sell signal would be 1,136.47 for the S&P500 and 1,999 for the NASDAQ at the end of the week. So there would be interest in the second-quarter earnings.

Then YAHOO disappointed some investors by meeting analyst expectations with what seems on the face of it to be a reasonable performance.
"
After the closing bell, Yahoo (YHOO: news, chart, profile) said that earnings in the second quarter more than doubled to $113 million, or 8 cents per share, from $51 million, or 4 cents per share, in the same period a year ago. Analysts expected Yahoo to earn 8 cents per share.

Yahoo said sales, excluding the cost it pays to Web distribution partners, grew to $609 million from $321 million in the comparable period a year ago. Analysts expected Yahoo to generate sales of $610 million.

Shares of Yahoo gave up $3.57, or 11 percent, to $29.03 in after-hours trading. The stock had already fallen 2 percent in regular trading, ahead of the report, largely because Yahoo had run up significantly in anticipation of a strong quarter.

Shares of Yahoo have risen 50 percent since the start of April, the month during which Yahoo last reported quarterly results. The stock also hit a 52-week high of $36.51 on June 30.

cbs marketwatch
"
Both the 50% rise since April and the 11% drop on this news seem strange. Is there an 'echo bubble'? Check 'echo bubble' in Google for more on this.

Whatever is going on, I still think the cybercrash should now be looked at as part of a wider pattern and there should be more emphasis on the long term potential of the web.

I am getting more interested in the longer term. I think this may be part of the 'summer of vagueness', a sort of drift without detail.

The major crash in internet stocks has more or less happened, or at least appaears to have happened. There may be another NASDAQ decline, and a general set of problems associated with financial issues rather than technology beliefs. But the overall shape is established in general memory.

So I think I will start to concentrate on comparing this cybercrash with previous crashes such as the South Seas, tulips and 1929. In each case something happened later that was quite positive for the economies of Netherlands, UK, US.

That will be on the main website at http://www.cybercrash.co.uk
There will be some comment here on short term developments, such as the next post.