Dot Com Companies Then and Now: How Are They Different?

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Dot-com companies then and now. How are they different and are we experiencing a new dot-com bubble?

Degree : Management with International Business
22 March 2012

Supervisor: Dr John Ahwere-Bafo

Candidate number: 100633010
Word count: 9176

Statement of authorship: This dissertation is the sole work of candidate

I agree that an anonymised copy of this work may be used by future students in the School of Management as an illustration of good work.

Contents:

Abstract…………………………………………………………………….……………….………………..4 Acknowledgements……………………………………………………..…………..……………….6 1. Introduction……………………………………………………………………..…………………..7 2. Literature review…………………………………………………………………………………..12 2.1 Emergence of Hyper Text Markup Language (HTML) and the development of network communication………………………………………………….12 2.2 What caused the bubble?.......................................................14 2.3 Valuating companies’ shares and behavioural finance………..……………17 2.4 Venture capitals…………………………………………………………………….………….21 3. Methods………………………………………………………………………………………………24 3.1 Methods of data collection……………………………………………………………….28 4. Results………………………………………………………………………………………………..31 4.1 Presentation of results from qualitative research……………………………31 4.2 Presentation of quantitative data…………………………………………………….34 5. Discussion…………………………………………………………………………………………..42 6. Conclusion…………………………………………………………………………………………..50 Appendices……………………………………………………………………………………………..54 Bibliography………………………………………………………………………………………………68

Abstract
This paper aims at answering whether there is a new dot com bubble emerging, similar to the one experienced after the introduction of the Internet to the mass public. Technological companies being a centerpiece in our present life are awarded with a load of attention by different kind of media. If a new internet bubble is emerging this would be an opportunity for people to create wealth but in the meantime would affect badly the stock markets after the bubble bursts. That is why the research project was conducted and with main objective of outlining if the next big bubble would be a technological one. In order to conduct this research several approaches were taken for ensuring maximum credibility and accuracy. In order to undertake a numerical analysis, the paper presents variety of IPO data for the years between 1980 and 2011 which is analysed in order to illustrate the point of a new stock market bubble emerging. Additionally an interview with investment brokerage CEO and back office manager was initiated for outlining the perspective of the people offering the possibility for investment in an internet company. Furthermore the perception of people for investing in stock markets is discussed as well as the way financial markets are affected by investors’ behaviour. Attention is given to the concept of social media bubbles as it might be of interest for further studies. By interpreting the numerical data the paper points out the high possibility for emergence of a new stock market bubble throughout the technological sector. This possibility is further supported by the data extracted from the interview. Although a difference between the internet bubble that was experienced during the late 1990s and the one emerging in the present might be found in the way they operate and gain revenue. The paper succeeds to answer the research question and contributes to understanding the cause for creation of stock market bubbles. It also draws a distinction between the two most recent crises as this helps to point out the reasons for the economic collapses caused by bubbles. Understanding the importance of such a project in the beginning of such a market anomaly lays the foundation for profiting from them as well as serves as a basis for further researches in this field.

Acknowledgements
Firstly I would like to thank my supervisor Dr. John Ahwere-Bafo and my course leader as he have always recalled to my need for help and guidance....
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