A dent in the stock market of technology?

On: October 12, 2007
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About Felicia Plijter


Google, Apple, Yahoo others of the technological part of the economy, suffered big losses on the stock market yesterday (de Volkskrant, 12/10/07). Whereas in the begining of the week their stock value went up they were now influenced by a report by JPMorgan, an important american financial services firm. In the report they lowered the sales estimate for Baidu.com.

Baidu.com is a chinese search engine and has the biggest share in the chinese market: it ownes 37% of the chinese market opposed to Google with 23% and Yahoo with 21%. Baidu had a great start(link is in dutch) when they first went to the stock market: on their opening day in august 2005 they went from a value of 25$ to 122$ a share. Despite this lower estimate of JPMorgan, Baidu has done quite well since those days. It has stayed ahead of Google on the chinese market and has launched a Japanese version although this one is not accessible in China.

The negative judgement from JPMorgan about Baidu indicates a more cautious approach to the what may be seen as a new internetbubble. The enormous profit Baidu made their first day in 2005 was absurd, looking at the profit the company was making that year (1.4 million $). This is just one example of stock value out of all proportion and may be comparable to the Netscape disaster on the stockmarket which burst together with the internetbubble in the beginning of the 21st century.

So far Baidu has grown a lot and no bursting has taken place. This will probably, if at all, not happen very soon either since the chinese market for search engines will probably double in the next year. They did however just now run into an obstacle. This diappointing analysis, which has also affected other big companies in the technological field may mean a more cautious approach towards technology. A critical view on new technologies remains necesary for both consumer and economy. Perhaps this time the bubble can be preserved.

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