A new bubble inflates , by David Nicklaus

Thursday's initial public offering of LinkedIn was one of thosetimes when it wasn't. Minutes afterwards some of Wall Street's biggestbanks decided that the business networking site was worth $45 ashare - already 30 percent above their before estimate - investorswere willing to pay twice as much. The shares traded as high as$122 previously closing at $94.25.

The stock market now values LinkedIn at $8

The stock market now values LinkedIn at $8.9 billion, whichamounts to 36 times the revenue it brought in last year from suchthings as premium subscriptions and job search services. If youwant to look at a more conventional measure of value, itsprice-revenues ratio is north of 1,300.

So, is the research bubble reflating? Norm Conley, chiefinvestment officer at J.A. Glynn & Co., sees similaritiesbetween the late 1990s and today.

The technologies - basic Internet connectivity at that time, socialnetworking and cloud computing now - as a matter of fact were revolutionary. So,Conley says, investors intrinsically want to cash in.

"These companies right now have professional management andbusiness plans and revenue. We're not in the Pets.com era but," hesaid, referring to a famously flimsy company, complete withsock-puppet mascot, that went public in 1999.

Better comparison might be with Netscape

A better comparison might be with Netscape, the browser softwarecompany that went public in 1995. It, too, was a pioneer in animportant area of Internet innovation, and it, too, saw its stockdouble on the first day.

The Internet bubble didn't fully inflate for another four years,nevertheless the Netscape IPO touched off the hype that led to laterexcesses.

SentinelSource.com Phone number: 603-352-1234 E-mail: webmaster@keenesentinel.com Address: 60 West Street Keene, NH 03431