Stand by for a new dotcom craze as alarmists forecast that cloud companies could fuel a hyper-inflationary investment boom-and-bust cycle. Guy Daniels reports.
By 2013, cloud computing could become a bigger investment bubble than the dotcom boom of 2000. That’s according to the US National Inflation Association, which describes itself as “an organisation that is dedicated to preparing Americans for hyperinflation”.
The NIA runs through the headline stats: a $74bn industry today, 3 per cent of global IT spending, a $150bn market by 2013, 14m new jobs by 2015, 90 per cent personal cloud coverage within three years. So far, so good. It then cites the three IPOs so far in 2012 of cloud computing stocks – Demandware, Guidewire and Brightcove – and the fact that all three of them have been major successes as evidence of the forthcoming bubble.
Guidewire Software went public in January at $13 per share and is this week trading at $33.04 for a gain of 154 per cent since its IPO. Demandware went public last week at $16 per share and finished the week up 69 per cent to $17.50.
Brightcove went public in February at $11 per share and finished last week up 92 per cent at $21.12.
The NIA reckons that enterprise social networking stocks could be the biggest gainers on Wall Street for the rest of 2012 and 2013. Jive Software and BroadVision are two publicly traded enterprise social companies today that are also cloud computing plays, and which the NIA believes stand out from the rest with the biggest upside potential for 2012 and beyond.
Jive Software is an enterprise social networking company that went public in December at $12 per share and now trades at $27.04. Its market cap is around $1.7 billion – on the high side for a company with only $77m in revenues and a net loss of $51m. Jive allows businesses to create their own internal social network over the cloud for employees, partners, and customers.
BroadVision, on the other hand, is the company behind Clearvale, which the NIA believes is the best enterprise social platform available on the market today. Its modest market cap is only $213m, but the NIA believes if it can capture a 10 per cent market share in 2016 then their revenues could reach $640 million – and if you apply Facebook’s current 27 times sales multiple (surely a bit of a stretch, but never underestimate the stupidity of traders) then BroadVision becomes a $17.3bn company.
Crazy talk? Maybe, but it’s crazy talk that created the dotcom boom of a decade ago, and the subsequent bust. Watch and wonder, as the 'Madness of Crowds' takes over again…
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