A lot of people were caught up in the dot-com stock market bubble that seemed to epitomise the last years of the 20th century. One thing is sure; it will happen again. Why? Because it has happened before and, as always, people quickly forget the lessons of history.
In 1711 there was the so-called South Sea Bubble, spurred on by the South Sea Trading Company, which, buoyed by promises of massive profits from the New World thanks to exclusive trading rights, saw its share price rise ten-fold within months. Promises of instant wealth saw companies pop up overnight to take investors' money for business propositions. That bubble outstripped the dot-com bubble in longevity; it lasted nine years, until one day in September 1720 when everyone woke up and decided they didn't want to buy any more shares.
A similar bubble sprung up in the 1630s in Amsterdam, when tulips rose in value to the point where single bulbs were changing hands for the equivalent of hundreds of thousands of today's pounds. Here too, the day came when nobody wanted to buy them any more, and the bubble burst.
Investors in the South Sea Bubble ended up with nothing; those who invested in the tulip bubble ended up with at best a few plants for their garden. ZDNet UK decided to look at what you could now buy if you were unfortunate enough had invested £10,000 in some of the technology darlings of the UK and Ireland when their shares were at their peak.
At the top of our list is chip technology developer ARM, one of the UK's leading success stories. Intel is among the chip manufacturers that have licensed its designs, and now the ARM core is becoming a standard component of almost every handheld device. And it's not just handheld computers like those that run on Pocket PC and Palm operating systems that need ARM-based processors. And as more features are packed into mobile phones, they too will require more power, so phone manufacturers are looking to ARM chips too. An investment of £10,000 in ARM at its height of over £7 per share would now be worth in the region of £5,000, just about enough to buy a single ARM developer kit.
Joining ARM as another UK success story is Newcastle-based Sage Group, the maker of accounting and business software for small to medium-sized businesses. Despite losing a court case earlier this year, which saw Sage lose the right to use the brand its accountancy software in the US under the 'Sage' name, the company has remained relatively strong. Nevertheless, £10,000 invested in Sage in early 2000, when its shares were trading at over £9, would now be worth about £2,800 -- not quite enough to implement the entry-level Sage Line 100 Range business suite in your business.
Everybody's favourite whipping post, BT, has actually not done too badly by its shareholders compared to some companies. Some blame the UK's incumbent telco for the slow rate of Internet adoption in the UK and ever-slower rate of broadband take-up. This blame flows largely from the local loop unbundling fiasco and a broadband strategy that originally saw BT trying to tie customers into lucrative ISDN contracts while the rest of the world moved on. An investment of £10,000 in BT at its peak would now be worth about £2,500, just about enough to install and run a BTopenworld broadband wireless service connecting up to four users to the Internet for one year.
Autonomy became famous not so much for its software as for the paper fortune it amassed for founder Mike Lynch, the UK's first Internet dollar billionaire. The company has been rather more successful at promoting Mike Lynch than it has at explaining what its software actually does. Ten thousand pounds invested in Autonomy at its peak of well over £30 a share would now be worth about £1,300, not enough to buy a copy of Knowledge Update, one of the company's server products, which mines unstructured information from different sources.
Another British success story is Psion, the manufacturer of the eponymous handheld devices that for years outsold anything in the UK from Palm or Microsoft Pocket PC licensees. Psion famously founded the Symbian consortium, a group of handheld computer and mobile phone handset manufacturers developing products based on Psion's EPOC operating system. Psion itself was poised to release products with mobile phone functions built in, but earlier this year partner Motorola pulled out of the manufacturing deal and left Psion in the lurch. Psion has since dropped out of manufacturing hardware altogether, and is now concentrating fully on the EPOC operating system. An investment of £10,000 in Psion in early 2000 would now be worth about £570, enough to buy a single Psion Series 7 colour PDA with 16MB of RAM.
Lastminute.com, the purveyor of last-minute deals, chose almost exactly the wrong moment to float on the stock market. The stock started falling almost immediately, from a very brief high of £4.80 in April 2000, to the 25p mark now. An investment of £10,000 in Lastminute.com when it went public in April 2000 would now buy you, for about £520, a Lastminute week for two in Lanzarote with a little spending money left over -- so long as you don't want to stay over the Christmas period.
Marconi, the one-time powerhouse named after one of Britain's most famous scientists, sank to new depths this year. A radical reorganisation that saw the company reinvent itself as a networking and telco supplier in 2000, just as the networking and telco supply market was on the verge of collapse, saw the company's shares plunge from a high of around £12 in late 2000 to just 13p in the wake of the 11 September events. The share price has since rallied to around 40p. An investment of £10,000 at the wrong time in this company would now yield about £330, about enough to buy you a single Marconi Forerunner ATM PCI 155MB per second fibre adapter to stick in your PC.
Baltimore is possibly the best-known Irish technology company. The security software company first attracted widespread attention three years ago when the 16-year-old Irish schoolgirl Sarah Flannery got the idea for her much publicised encryption algorithm while working there on a summer job. Intel invested in the company, though it is not thought that this investment was connected with Sarah Flannery's involvement, and the share price increased modestly to over £13 by early 2000. It is currently hovering around the 20p mark. An investment of £10,000 in Baltimore would now be worth about £150, enough to pay for six user licences of a 50-user version of the company's WEBsweeper cacheing Web proxy, which filters all incoming and out-going Internet traffic -- but you would have to find another half-dozen friends in the same position who could between them pay for the rest of the licences. Recent indications from Baltimore that it might offer PKI developer kits for a very low price indeed, to help drive take-up, means that you still might get lucky, even with that £150.
One of the great benefits of the Internet is the new business models that it enables. The attractive economies that the Internet brings are particularly relevant to auctions and other types of marketplace where large numbers of buyers and large numbers of sellers are exchanging goods and money. Many dozens of auction models have sprung up, with varying degrees of success. One of the best-known auction sites in the UK is QXL, which has seen its fortunes slide as its share price plummeted, from a high of over £7 in January 2000, to around 3p now. An investment of £10,000 in QXL at its height would today buy from QXL's Web site an 8x10 print from the Rocky Horror Picture Show signed by Richard O'Brien, for about £40.
Joining QXL at the bottom of the list is Scoot, the business yellow pages, which at one point owned the Loot newspaper group. Scoot's shares never climbed as high as QXL's, topping out at around £3.40, but they have plunged to even greater depths, recently dipping below the 1p mark. An investment of £10,000 in Scoot at its height would now be worth about £40, just about enough to pay for one month's broadband Internet access in the UK so you can browse Scoot.com at your leisure for 30 days.
Shares can go up as well as down
Investors should note that the value of shares can go up as well as down. If any of these shares ever climb back to their pre-crash highs, the rewards for adventurous investors would be huge. In such an unlikely scenario, £10,000 invested in Scoot now would grow to a staggering £2.27m. QXL would make a more modest £230,000 and ARM a paltry-by-comparison £20,000.
See ZDNet UK's Christmas & New Year Special for our look at the tech world in 2001, and what's coming up in 2002, plus a shopping guide with reviewers' best buys. See techTrader for the latest financial news in the high-tech sector. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet news forum. Let the editors know what you think in the Mailroom. And read other letters.