Dot com bubble crisis

1. THE DOT COM BUBBLE
BURST THAT CAUSED THE
2000 STOCK MARKET CRASH
Reference Sites:-
1. www.stockpickssytem.com
2. www.thebubble.com
3. www.wisegeek.org
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2. 2
WHERE AND WHEN DID CRISIS HAPPEN?
START OF THE CRISIS
As per the records of September 1st 2000 of
NASDAQ, the trading was at 4234.33. The fall
started after that and by January 2nd 2001
IMPACT OF THE CRISIS
There was a drop of 45.9% and the
NASDAQ was now trading at 2291.86.
There was a drop of 78.4% from the
5132.52 of March 2000. In October 2002,
the NASDAQ was trading at 1108.49.

3. 3
FEATURES
 Dotcom companies created an impact in the mindset of investors that
the value of IT software companies is more than any other sector.
 Genuine companies were left in the stock market.
 The result impacted in a large association of investors and brokers into
the picture.
 Needless to say, the New Economy theory was proven wrong and
traditional economic principles still hold.
 Dotcom it still too close to us to be able to fully understand.

4. 4
IMPACT
 GDP of Europe and USA fallen down slating.
 The Investment bond market was badly hit and has been in perpetual
decline.
 Many companies changes there name to remove any association as
Dot.com
 Several Companies went bankrupt.
 Many struggling companies were acquired or merged with other
companies.
 Stock market crashed heavily resulted n loss of almost US $ 8 trillon
wealth.

5. 5
CORRECTIVE ACTIONS TAKEN BY GOVERNMENT
 Individual’s Minimum Bank Balance - $25,000.
 Consent from the higher authorities (CEO and CFO).
 Strict monitoring by government attorney.
 Hefty penalties will b charged incase the criteria`s are not fulfilled .
 Positive Accounting Reforms.
 Transparent Financial Activities (Both Domestic & Offshore).
 Isolation in working behaviours (Investment Bankers & Research
Analyst).

6. AFTER EFFECTS OF BUBBLE DOTCOM
 Many tech startups were running out of capital, which required them to get liquidated while some other
companies got acquired. The liquidated companies’ domain names were taken over by “old economy”
companies or domain name investors. A number of companies and executives were either accused or
found guilty of frauds. These companies not only grossly misused investor’s money but also concealed
facts from the shareholders while artificially boosting net profits.
 The negative impact of dot-com collapse was also felt in some other industries. For example, advertising
and shipping industries were forced to scale back their operation owing to sharp fall in demand for their
services. Nevertheless, some companies, thanks to their sustainable business models, survived the
tumultuous phase. Companies like Amazon.com, e-bay and Google not only ensured their survival in the
long run but also went on to become market leaders in their respective spheres.
 The dot-com meltdown and subsequent stock market freefall between 2000 and 2002 destroyed the
market capitalization of several companies, amounting to $5 trillion.
 U.S. stock market watchdog, the Securities and Exchange Commission (SEC) even levied hefty penalty on
investment banks like Citigroup and Merrill Lynch, which ran over millions of dollars, for misleading
investors.
 About 50% of the tech startup started during the dot-com boom survived through 2004. Nonetheless, this
experience also showed those companies termed as “small players” were in better position than some
huge IT giants to endure the aftereffects of dotcom collapse- a time when financial markets were in critical
situation.
 Retail investors who bore the maximum brunt from dotcom collapse became more cautious.
 The IT job market completely collapsed. Several technology experts, who were laid off, post dotcom
collapse, saw supply outstripping the demand by a long way.
 In universities, courses related to IT, saw significant drop in enrollments. Many jobless programmers and
IT experts went back to schools to become lawyers, accountants and management graduates. 6

7. 7
(a) Where and when did crisis happen? - Dheeraj
(b) What was the cause of crisis? - Abizar
(c) What were the key features of that crisis? - Suraj
(d) What was its impact? - Raj
(e) What was the corrective action taken by Governments/ Other agencies? - Paras
(f) What was the effect of that crisis? - Pooja

8. Reference Sites:-
1. www.stockpickssytem.com
2. www.thebubble.com
3. www.wisegeek.org
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THANKS FROM
ITM BATCH 41
GROUP MEMBERS:
PARAS BIJARNIA
POOJA BIJARNIA
DHEERAJ SHARMA
SURAJ KULAL
ABIZER
RAJESH GADKARI