Silicon Valley’s math is getting fuzzy again.There's a lovely symmetry in the choice of Yahoo as the benchmark for 2007 dotcom value vs. Facebook.
Internet companies with funny names, little revenue and few customers are commanding high prices. And investors, having seemingly forgotten the pain of the first dot-com bust, are displaying symptoms of the disorder known as irrational exuberance.
Consider Facebook, the popular but financially unproven social network, which is reportedly being valued by investors at up to $15 billion. That is nearly half the value of Yahoo, a company with 38 times the number of employees and, based on estimates of Facebook’s income, 32 times the revenue.
Google, which recently surged past $600 a share, is now worth more than I.B.M., a company with eight times the revenue.
More broadly, Internet start-ups are drawing investment based on their ability to build an audience, not bring in revenue — the very alchemy that many say led to the inflation and bursting of the dot-com bubble.
Silicon Valley Start-Ups Awash in Dollars, Again (The New York Times)