The Millennium Semiconductor Survival Guide.

Chapter 153 The Beginning of the Bubble Burst
"Paul Krugman believes that Greenspan has been waiting for the bubble to burst, and he will come out to clean up the mess after the bubble bursts. The Fed's interest rate hike will have a profound impact on the plunge of the Nasdaq index dominated by Internet companies."

Paul Krugman, a New York Times op-ed economics critic who would go on to win the Nobel Prize in Economics in 2008, has a perennially pessimistic view of the internet.

Before the bubble was inflated in 1998, Krugman believed that the impact of the Internet on the economy would not be greater than that of the fax machine around 2005.

"Burning up, warning, Internet companies will run out of cash faster than people think."

"MicroStrategy stock plummets 62%
Shares in Vienna-based software company MicroStrategy tumbled 62% yesterday after it announced that its revenue for the first half of 1999 was much smaller than initially reported and that it expects to post a full-year profit loss.

Under the Federal Reserve's interest rate hike and no profit correction, the company's stock price fell by $333 from a peak of $140 per share, and its market value fell by as much as 62% in a single day. The personal wealth of its founder and CEO Michael Saylor A decrease of $61 billion.

According to Michael Saylor, the company simply spreads the revenue of large upfront payments over multiple years over a longer period of time.

MicroStrategy's plunge is one of the strongest demonstrations of the volatility in internet and other tech stocks, and the questionable nature of the numbers some companies have been reporting.The surprise news that a star Washington-area company is restating its financial results for the past two years has sparked investor anxiety about the technology revolution, with some worrying it could also be a speculative bubble.

'We think this is a wake-up call for investors who have bought Internet-related companies,' said Jon Moody, a financial analyst at Scott & Stringfellow in Richmond. ’ Maybe that calls into question how we value these stocks. '

The MicroStrategy debacle also underscored investor concerns about regulators and growing sensitivity to Internet companies.

Many companies calculate their financial performance incorrectly, exaggerating their success.When companies need to recalculate results, the consequences can be disastrous for shareholders.

'There's absolutely no fraud here, and there's no sign of it,' Seiler said in an interview yesterday, adding: 'I don't think investors have been misled. '

But Howard Schillett, who analyzes corporate financial data for institutional investors, said, 'For investors who rely on financial reports, it's a nightmare. '

Schillett's Rockville-based firm has issued two reports in recent months questioning MicroStrategy's financial reporting.

Analyst Burt Field said: 'I think they've kind of crossed the line. ''Their classification of income is clearly more radical than that of others. '

SEC Chairman Arthur Leavitt warned about the company's accounting caliber more than a year ago, saying: "Operating in a gray area between legality and blatant fraud ... financial statistics have long since been distorted."

According to Leavitt, one of the main areas of distortion is premature bookkeeping.

In December, the SEC issued new guidance aimed at clarifying existing accounting principles about how companies should calculate revenue.These guidelines prompted MicroStrategy's decision to restate its results," Thaler said.

MicroStrategy has a market value of more than $200 billion, and the company will be sold for $2700 million at the bottom of the valley.

When BTC becomes popular, it will become the company with the most BTC in the world.

The plunge in MicroStrategy's market value has become a symbolic event of the bursting of the Nasdaq bubble. Everyone is seriously thinking about this issue. Nasdaq is overvalued.

Only some investors and economists thought so before, but today, especially MicroStrategy’s valuation has plummeted due to falsified financial data, which has led to a crisis of investors’ trust in Internet companies.

The Nasdaq market on the other side of the ocean is burning. Bill Gates, Yang Zhiyuan, Gerald Levine and others have come to Huaguo to participate in the first session named "Internet Changes the World" at the invitation of Zhou Xin. Internet Conference.

Everyone is very interested in the Huaguo market. Compared with American, Huaguo has a much larger population and huge potential.

On the first day, after Zhou Xin delivered a short speech at the Internet Conference in the morning, the afternoon was the summit session. Zhou Xin could clearly feel that all the participants at the scene were worried.

The news from Nasdaq was reported to Zhou Xin in real time: "Boss, you are really amazing. Our steady strategy based on the S&P 500 combined with actual dividends and dividends has risen by more than 20.00% in the past week.

Now, from Wall Street to Silicon Valley, more and more investors are beginning to doubt whether technology stocks are really worth so much money, no, everyone.

Everyone is beginning to have doubts. When I was chatting with my friends who work on Wall Street, they have begun to consider turning to mature stocks in traditional industries. "Warren Johnson's voice on the phone to Zhou Xin was full of excitement.

As the manager of the asset management company under Zhou Xin's name, his salary is highly linked to the company's benefits.

The general direction of the strategy was formulated by Zhou Xin, but the specific stock selection was done by him and the company's professional investors.

Before the bubble burst, many people knew it was a bubble, but regardless of whether it was a bubble or not, it was able to rise without thinking.

This is the same as the brainless rising sector in Big A. Even if you know that the listed companies of Big A do not have this technology, AI is really the future, and the listed companies of Big A will eat some cake crumbs at most.

But there is no way you have to buy the stocks of these companies for performance, revenue and profit.

Nasdaq is the same reason.

But Zhou Xin is different. After completing the settlement with Time Warner, Zhou Xin and Time Warner received 450 billion US dollars in cash after paying taxes, and set up a stable direction for S&P 500 index stocks with half of it.

As for why he didn't short Nasdaq, because before the bubble burst, Zhou Xin couldn't grasp the time, and he brought huge changes to the entire Internet market.

Especially quora, quora's success and business model have greatly pushed up the Nasdaq index. Zhou Xin can't guarantee that the bubble will really start to burst in 2000 like the original space-time.

As a result, the time has moved forward, and the Nasdaq bubble burst earlier and landed faster.

Of the US$740 billion in cash, only US$466.2 billion remained after paying taxes. At the same time, related fees had to be paid to Goldman Sachs, and the final amount was US$450 billion.

In the past week, their stock selection strategy has risen by 20%, and in the past three months, they have risen by a total of 30%, which means that the stock market alone has reached $67 billion.

Zhou Xin said: "Continue to keep an eye on the Nasdaq market."

Nasdaq's sharp drop, not yet a sharp drop, has already spread from the other side of the ocean to Huaguo.

Internet entrepreneurs who were able to get investment are now almost impossible to get money from American's investment institutions.

Huaguo Internet companies listed on Nasdaq are also facing a sharp drop in market value.

All participants are being affected by the overall environment.

Even so, the dialogue between Bill Gates, Jerry Yang, Gerald Wright and Zhou Xin in the afternoon still attracted attention.

The lack of investment and the sharp drop in market value did not affect their desire to hear the views of the bigwigs.

"Before the start of the Internet conference, the organizer asked me who would be the host of today's highlight event. I thought about it, and there are already four of us present, and adding another host would make it a bit crowded.

So I said, no, it’s fine for me to be the moderator myself. It’s nothing more than activating the atmosphere, which I’m good at. "Zhou Xin has Gerald Wright on the left, and Bill Gates and Jerry Yang on the right.

"The audience here are Internet practitioners from all over the world. Everyone must be very concerned about the future of the Internet. What I need to do when running a business can meet the development of the times and the needs of users."

(End of this chapter)