Facebook’s Valuation Warning: When Yahoo! Was Worth More Than Intel, Verizon, And Pepsi

25-Mar-2011

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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

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By Jonathan Berr, 247 WallSt,

Are investors forgetting the lessons of the dot-com bust of the 1990s?It would seem to be the case.

Just like in the Clinton administration, companies with uncertain prospects are attracting insanely high valuations.   What else could explain the $25 billion market capitalization of Groupon, the online coupon service that went in business  in November 2008 which now reportedly has a revenue run rate of about $2 billion?  The 1,500-person company is worth to investors almost as much as FedEx Corp. , which incorporated in 1971, employs more than 285,000 workers and generated $34.7 billion in revenue last year.  Maybe it’s because Groupon reportedly had the audacity to turn down a $6 billion buyout offer from Google Inc.

Who knows?  That’s the point with tech investing, or any other types of investing,  no one really knows what the future holds.  Who would have thought back in 1999 that Microsoft Corp. would no longer be the world’s most valuable company in 2011?  The software maker’s market share tells the story.  In 1999, Microsoft was the most valuable company on earth, valued at $583 billion.  The Redmond, Washington company is worth $212.58 billion today.  Interestingly,  Exxon Mobil Corp., currently the most valuable company, is worth $411.17 billion, less than what Microsoft was worth at the height of its value.

Other names from the dot-com bust either got swallowed up by larger rivals like Sun Microsystems Inc. (NASDAQ: SUNW), worth $116 billion in 1999, or have only a fractions of their former market capitalizations like Yahoo! (NASDAQ: YHOO), worth $113 billion at that time.  In 2009, Oracle Corp.  (NASDAQ:ORCL) acquired Sun Micro for $7.4 billion.  Yahoo is now worth about $21 billion.

Apple Inc.  (NASDAQ:AAPL) came out of the dot-com bust worth a measly $17 billion and now is valued at $311.94 billion, thanks to the spectacular success of the iPod, iPhone and iPad.  Not bad for a company dismissed as a niche player back in the day.

Today’s Internet hero can be tomorrow’s zero (Friendster and MySpace) in the click of a mouse. 24/7 Wall St. decided to show the phenomena in the following chart.

Biggest U.S.  Companies By Market Cap (24/7 Wall St.  Real Time 500 3/21/11,  1999 Data Courtesy Capital IQ in bold.)

Private Market Values of Today’s Hottest Companies
  1. Facebook — $75 billion (compares to Amazon.com (NASDAQ: AMZN) — $74.3 billion)
  2. Groupon — $25  billion (compares with FedEx Corp.  (NYSE: FDX) — $28.4 billion.)
  3. Twitter — $8 billion (compares with Limited Brands Inc.  (NYSE: LTD) – $10.8 billion.)
  4. Zynga — $9 billion ( compares to  Harley-Davidson C0.  (NYSE: HOG) — $9.6 billion)

FYI: Apple   Inc.  (NASDAQ:AAPL) $17 billion  1999

1. Microsoft Corp.  (NASDAQ:MSFT) $583 billion   1999
2. Exxon Mobil Corp.  (NYSE: XOM)  $411.17 billion
3. Apple Inc.  (NASDAQ: AAPL) $311.94 billion
4. Intel  Corp. $275  billion  (NASDAQ: INTC) 1999
5. America Online Inc. (NYSE:AOL)    $251 billion  1999
6. Microsoft Corp.  (NASDAQ: MSFT) $212.58 billion
7. Chevron Corp.  (NASDAQ: CVX) $210.62 billion
8. General Electric Co.  (NYSE:GE) $209.40 billion
9. Nokia Corp. $197 billion  (NYSE: NOK)  1999
10. International Business Machine Corp. (NYSE:IBM) $192.53 billion
11. Berkshire Hathaway Inc.  (NYSE: BRK.B)  $191.39 billion
12. Wal-Mart Stores Inc.  (NYSE: WMT) $184.76 billion
13. JPMorgan Chase & Co.  (NYSE:JPM) $181.61 billion
14. Google Inc.  (NASDAQ: GOOG) $185.42 billion
15. Procter & Gamble Co.  (NYSE: PG) $171.88 billion
16. Wells Fargo & Co.  (NYSE:WFC) $167.66 billion
17. AT&T Inc.  (NYSE:T) $167.47 billion
18. Johnson & Johnson  (NYSE:JNJ) $161.03 billion
19. Pfizer Inc.  (NYSE:PFE) $160.30 billion
20. Oracle Corp. (NASDAQ: ORCL) $159.4 billion
21. Coca-Cola Co. (NYSE: KO) $145.77 billion
22. Bank of America Corp.  (NYSE:BAC) $141.44 billion
23. Citigroup Inc.  (NYSE:C) $128.72 billion
24. Schlumberger Ltd.  (NYSE:SLB) $121.35 billion
25. Sun Microsystems Inc. (NASDAQ: SUNW) $116 billion 1999
26. Philip Morris International Inc. (NYSE:PM) $113.43 billion
27. Yahoo! (NASDAQ: YHOO) $113 billion 1999
28. Intel Corp.  (NASDAQ:INTC) $111.24 billion
29. ConocoPhillips (NYSE:COP) $111.08 billion
30. Verizon Communications Inc.  (NYSE: VZ) $103.03 billion
31. PepsiCo.  Inc.  (NYSE:PEP) $101.82 billion
32. Merck & Co.  (NYSE:MRK) $99.83 billion
33. Cisco Systems Inc.  (NASDAQ:CSCO) $96.3 billion
34. Hewlett-Packard Corp.  (NASDAQ:HPQ) $90.42 billion
35. Royal Bank of Canada (NYSE:RY) $86.98 billion
36. Qualcomm Inc.  (NASDAQ: QCOM) $88.42 billion
37. Broadcom Communications Ltd.  (NASDAQ:BCOM) $88.81 billion
38. Goldman Sachs Group Inc.  (NYSE:GS) $83.66 billion
39. Occidental Petroleum Corp. (NYSE:OXY) $81.89  billion
40. Walt Disney Co. (NYSE:DIS) $79.44 billion
41. McDonald’s Corp.  (NYSE:MCD) $76.9 billion
42. Toronto-Dominion (NYSE:TD) $75.36 billion
43. Abbott Laboratories (NYSE:ABT) $74.25 billion
44. United Technologies Corp.  (NYSE:UTX) $75.07 billion
45. Amazon.com Inc.  (NASDAQ:AMZN) $74.3 billion
46. United Parcel Service Inc.  (NYSE: UPS) $72.21 billion
47. Suncor Energy Inc.  (NYSE:SU) $71.41 billion.
48. Caterpillar Inc. (NYSE: CAT) $68.46 billion
49. Comcast Corp.  (NASDAQ: CMCSA) $67.36 billion
50. 3M Co.  (NYSE:MMM) $64.89 billion

 

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