2. 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
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
