It has been over two years since what is now called the technology bubble in the U.S. stock market burst, wiping out over $2 trillion from the value of hundreds of high-tech companies. There are tentative signs of an upturn in the U.S. high technology sector.
The Nasdaq stock market, where most high-tech companies are listed, last week had its best week in several months. The Nasdaq index was up about five percent. But from its February 2000 peak, the Nasdaq is still down over 60 percent. Even for the year 2002 the Nasdaq is down. Individual investors have lost millions of dollars.
Larry Magid, a technology analyst and writer in Palo Alto in the center of the Silicon Valley, says investors are still having a hard time coming to terms with the savage and relentless decline in stock prices. Mr. Magid says during the bubble years of 1999 and 2000, investors thought the Internet had revolutionized everything and that high-tech stock prices could only go up.
"There was a great deal of enthusiasm and optimism," he said. "And then the bubble burst. And it burst much faster than any of us could ever have imagined. It was literally like a house of dominoes falling down, where just one company after another after another and the market kept sinking and sinking."
With the bear market in high-tech having persisted for so long, many individual investors who were once active in the market have turned away. Tom Hlavenka, a retired executive in San Francisco, has lost several hundred thousand dollars in the high-tech crash. He and his wife take fewer foreign vacations now, but the financial losses have not fundamentally altered their life style.
Indeed, Mr. Hlavenka is poised to eventually invest more money in the market. "I am going to wait a while until some of the tech stocks begin to rebound," he said. "[But] I think technology is here to stay. And it is the future of the world. Technology, you cannot knock it.
The layoffs at leading Silicon Valley companies like Hewlett Packard Compaq, Intel, Yahoo and Applied Materials have leveled off. Orders for semi-conductors (computer chips) are again increasing.
Larry Magid also is cautiously optimistic that the worst of the downturn may be over. The Internet, he believes, is a transforming technology. And that while the "dot com" mania is over, traffic and business on the Internet has continued to grow.
"Whether we have hit bottom in the stock market, I do not know. If I did," he said, "I would be in Wall Street and not in the Silicon valley. But I do think there are some wonderful things that can happen through technology. And there is money to be made from it. The [worldwide] web will not die. The web is actually stronger than ever. There are more web sites and traffic than ever before. But we just have not figured out a way to commercialize it."
But thousands of sobered and poorer tech investors remain skeptical. They are waiting for real, tangible gains in stock prices - something that would recover some of the 50 to 90 percent declines in the prices of many high-tech companies.