Talking Stock: Here today dotgone tomorrow By Philip Coggan in London Published: October 9 2000 11:34GMT | Last Updated: October 9 2000 12:22GMT

Seven months on from the collapse of the dotcom bubble in the UK and the US gives us some time and space to take a more measured look at the sector.

Some of the falls have been savage. In the US, Priceline.com shares are 97 per cent off their peak. In the UK, one-time hot issues have also suffered; Lastminute.com, floated at 380p, languishes at 137=p and QXL.com, once 744p, is now at 40p.

It has not helped such stocks that many investors were only ever interested in them as a short-term ride. Once the share prices started to turn, there were no more buyers and existing investors scrambled for the exits. This is why I call the October-March period a "bubble" - investors were only buying because they expected other investors to do so.

The business models for such companies were always fraught with dangers. Consumers seem to regard the internet as bargain basement - where information is provided free and goods can be acquired at low prices.

At the same time, there are very few barriers to entry for new businesses and existing "old economy" companies are establishing their own internet brands. The result is intense competition and low margins.

Take Interactive Investor International, the investment website whose shares hit 415p but are now around 50p. Off the top of my head, I can think of more than half a dozen similar sites: motley fool, money guru, UK invest, market-eye, FTMarketWatch the street.co.uk and Citywire. These sites are all hoping that a combination of advertising and e-commerce will make them money but how can there be enough revenue to go round?

In the old days, the likes of Lastminute and Interactive would not have been floated as early as they were. The general public would only have got to invest in them after they had established a profitable track record; the losers would have fallen by the wayside well before they joined the stock market.

But of course, bubble valuations and the need to put a cash value on employee share options drove many untested companies to the market. Sadly, many private investors will have paid the price for that haste.

Fortunately, there are plenty of well-established technology companies available for investors who want to benefit from the growth of this sector. Unfortunately, most of them look too expensive for the moment.

The best time to invest in the sector is when there has been a further shakeout of companies and prices and there are magazine covers proclaiming that the internet is dead or a flop. Perhaps that's a year or two away.

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-- Carl Jenkins (Somewherepress@aol.com), October 10, 2000