Last year October I had asked whether the 5 signs of a frothing bubble 2.0 mentioned in WSJ could mean something. Well, it seems more people are worried in and talking openly about it. Forbes in a long article is quoting VC Jim Breyer (an early investor in Facebook) and pointing to serveral downtrends at CISCO, Intel, and Apple along with a weak employment market in the US:
Think of it as Silicon Valley's seven-year itch....The ramifications for the tech world of an overall economic slowdown are "huge," says Breyer..."Silicon Valley is often very delusional," he continues. "So one of the challenges is to step back and say, 'If there is a recession, why won't advertising spending be cut dramatically? And if advertising spending is cut dramatically, why doesn't that deeply affect our consumer Internet companies?'
...A more than significant effect is already being felt. Google...which carried the mantle of imperviousness from its 2004 initial public offering through the end of last year, has been in a free fall, at least measured by the price of its stock. (GOOG shares are down 41% from their peak last November.)
The turmoil isn't restricted to advertising-sensitive businesses. Cisco...has warned of several quarters of economic "bumps." Intel...disappointed investors by cutting profit expectations due to weak pricing in a segment of the memory-chip market...Apple...has plunged of late due to fears that its growth rate will suffer as consumers pull back their spending.
Signs of weakness extend beyond the company level. Employment dropped by more than 33,000 jobs in the five-county Bay Area in January, as measured by the California state government. Commercial real estate...is showing strains as well. After years of gains, occupancy for offices, R&D facilities, and industrial tenants declined by 1.5 million square feet...
The signs indeed are grim. The Indian stock market has also been on a bumpy ride in the last two months -- with fears of a US economy slowdown. What do you think? Are we nearing Bubble 2.0?
