24/4/16: Silicon Valley Blues Go Into a Sax Solo...

In recent weeks, I have been covering growing evidence of pressures in the ICT sector bubble (the Silicon valley blues of shrinking VC valuations and funding). You can track this coverage from here: http://trueeconomics.blogspot.com/2016/04/21416-taking-sugar-from-kids-pantry.html.

Now, with its usual tardiness, the Fortune arrives to the topic too, in a rather good exposition here: http://fortune.com/silicon-valley-tech-ipo-market/.

Good summary graphic from Renaissance Capital:

But, of course, what is more interesting in the sector development is the horror show of earnings reporting that is unfolding across mature segment of the tech sector. These are well-covered here: http://wolfstreet.com/2016/04/24/apple-iphone-revenue-decline-sinks-tech-sector-earnings/, offering the following summary:

So let's see: earnings in mature segment are falling or the 5th quarter in a row (even when you control for Apple performance); earnings of Apple (tech leader) are into their second consecutive quarter of severe pressures. And unicorns (which don't even offer any serious basis for fundamentals-based valuations, including those on the basis of earnings) are rapidly taking on water. You don't really need a CFA to get this one right...

21/4/16: Taking Sugar From the Kids Pantry: Tech Sector Valuations

In a recent post I covered some data showing the trend toward more sceptical funding environment for the U.S. (and European) tech start ups: http://trueeconomics.blogspot.com/2016/04/15416-tech-sector-finance-gravity-of.html.

Recently, Quartz added some interesting figures to the topic: http://qz.com/664468/investors-are-slashing-startup-valuations-and-not-even-uber-and-airbnb-are-safe/.

Things are not quite getting back to fundamentals, yet... but when they do, tech sector hype will blow up like a soap bubble in a tub. When the entire sector is valued on the basis of some nefarious stats instead of hard corporate finance parameters, you are into a game that is what Russian Roulette is to a Poker table.