April 8, 2004 12:36 PM PDT

Is the tech world partying like it's 1999?

Stock splits? Bidding wars on handhelds? Free stuff? The tech world is showing signs of having boarded a time machine set for 1999.

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What's new:
A resurgent economy and increased technology spending have revived--on a small scale, at least--some of the gung-ho business tactics and giddy public behavior of the dot-com era.

Bottom line:
Stock splits, conspicuous gadget consumption, rising share prices and Beemer purchases aside, people aren't losing their heads just yet. All they need to do is look at the sea of empty cubicles around them to realize things aren't all smiles.

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A resurgent economy and increased technology spending have revived--on a small scale, at least--some of the gung-ho business tactics and giddy public behavior of the dot-com era. While no one expects the blind optimism of that era to return, many of the trappings are certainly back.

On Wednesday, for instance, search giant Yahoo and BlackBerry manufacturer Research In Motion both announced 2-for-1 stock splits. Until recently, stock buybacks were more the thing. Yahoo, which last split its stock in January 2000, widely beat the earnings expectations of Wall Street analysts, and its stock rose over $7 Thursday morning to reach a three-year high.

RIM didn't beat expectations, but the company pointed out that it would have if extraordinary litigation expenses were removed. The Waterloo, Ontario-based company also pulled in $1 billion in a secondary offering recently.

On the same day, communications chip specialist Broadcom bought Sand Video, which makes compression technology. It was one of only a few acquisitions for Broadcom in recent months. In 1999 and 2000, by contrast, Broadcom purchased more than a dozen companies--then spent the next three years restructuring.

Once again, a favorite pastime for workers in Silicon Valley is checking their company's stock price and mentally counting up how much their stock options are worth. That's certainly the case, for example, at chipmaker National Semiconductor, whose shares are trading at around $47, up from the high teens a year ago.

"At National, people are well aware that our stock has grown 150 percent or more in the last year," said company spokesman Jeff Weir. "That's something that would catch your attention."

Meanwhile, in a handful of eBay auctions, prices for the Treo 600 from PalmOne have been exceeding the product's retail price, harking back to the days of tech mania. In the past, consumers bid above retail price on hard-to-get Palm devices on online auction sites.

"The Treo 600 is a cool product," said Jerry Benson, vice president at research firm DisplaySearch.

Even the luxury goods market is coming back to life, a sign that executives and engineers feel more comfortable in their jobs. Jeremi Silva, who sells cars at Stevens Creek BMW in Santa Clara, Calif.--Intel's hometown--says there has been a noticeable increase in sales in recent months, with the dealership selling every one of the new 645 models it's been able to get its hands on.

"This is a car that's got a sticker price of $79,000," Silva said. "There's definitely some money out there."

In another sure sign that business is picking up, cars are slowing down. During the trough after the dot-com boom, a driver could practically fly between San Francisco and Palo Alto. Now that commute is nearly as bad as it was during the go-go days.

"I noticed it especially after Labor Day," longtime Bay Area traffic reporter Ron Lyons said in an October interview.

A dose of reality
Stock options are a good symbol of how much times have changed. During the dot-com boom, it was common practice for high-tech companies to hand out options as an incentive for employees, and many workers became rich as a result. Those options didn't count against a company's earnings. But now the Financial Accounting Standards Board is recommending that companies expense stock options, a requirement that would sharply cut into profits. The proposal has tech companies and venture capitalists up in arms.

There are other signs as well that the bubble is long gone. A surging stock price allowed Internet service provider America Online to buy media giant Time Warner in 2000. Last fall, the combined company, burdened by financial woes at AOL, dropped the short-lived AOL Time Warner moniker in a reflection of how the online unit had fallen from grace.

Other companies that briefly dominated the scene--Webvan and Pets.com, for instance--have vanished completely.

Many jobs are long gone, too. And although the economy as a whole has been picking up, tech companies have been looking overseas for lower-cost labor.

Still, the upward momentum is there. Stock offerings of new companies, which had slowed to a trickle, are slowly becoming more commonplace. While many of the new entrants are established companies with profits, some are relatively young. Wi-Fi specialist Atheros, founded in 1998, went public in February while reporting net losses. Its stock is trading above the opening price. Seven Networks, a wireless e-mail provider that has yet to show a profit, is expected to go public soon.

Venture funding has also begun to rise.

"Buck's is getting crowded again," Ronald Weissman, a partner at Apax Partners, a venture capital firm, wrote in an e-mail interview in reference to the Woodside, Calif., diner where many VCs hold meetings. "But most other indicators haven't changed all that much. And I've heard nothing as crazy as my daughter's high school writing business plans in English class, circa 2001."

And although search bellwether Google continues to refuse to comment on widely rumored IPO plans, it too has begun to engage in late-1990s antics. A week ago, it launched a free e-mail service that raised the hackles of privacy advocates but enticed others with the promise of a free gigabyte of storage.

How does Google plan to make money off this service? Advertising, of course. How dot-com can you get?

However, even amid the excitement, there is a strong memory of what can happen if things go too far, too fast. All people need to do is look at all the empty cubicles around them to realize things aren't all smiles.

"To paraphrase something I heard recently, our industry is made up of very smart people who act collectively like idiots," said Steve Tobak, a principal at Invisor Consulting. "Venture funding is definitely on the rise, but VCs are still understandably cautious."

"The barriers are still significantly higher for entrepreneurs and, although they'll come down over time, it will be a gradual process," Tobak added.

And though businesses say they'll be increasing their IT budgets this year, executives say those increases will be modest, with big-ticket items lower on the list.

The underlying rationality can also be seen in how companies spend their money in other areas, National Semiconductor's Weir said, pointing to the fact that budgets for marketing and advertising aren't returning to levels seen in the rah-rah days. "During the dot-com era, there was way more spent on that than on products," Weir said.

Still, venture capitalist Weissman, like others, noted that concept investing has occasionally begun to pop up again. He pointed in particular to the phenomenon among Web portals and other online entities of social networking, an activity in which people can share their Web searches with friends.

"In terms of brash or brainless business models, Social Networking certainly takes the cake for me...I call it Social Spam," he wrote. "But it looks like this lunacy has already peaked."

CNET News.com's Richard Shim contributed to this report.

 

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