Facebook - New Tech Bubble?

Derek DeCloet has written a very interesting article titled 'Talk of a new bubble hides the truth about tech' in The Globe & Mail (Friday, the 7th January, 2010) published from Canada. http://www.theglobeandmail.com/report-on-business/commentary/derek-decloet/talk-of-a-new-bubble-hides-the-truth-about-tech/article1862431/

He notes that Facebook's valuation of $50 billion is 100 times its 2010 net income...a valuation described by the WSJ as reminiscent of the tech bubble of 1999. As against this, Blackberry maker Research in Motion (RIM) trades at $32 billion, nearly 8-10 times its expected 2011 earnings of $3-4 billion and Cisco valued at $116 billion at roughly 15 times its expected earnings of $8 billion.
Very interesting report providing a comp analysis of Facebook vs RIM vs Cisco. Almost stating that Facebook is overpriced.
 
The problem with comps is that they are a series of 'quant' columns e.g. p/e, ev/ebitda, but they rarely have a 'qual' column. The qualitative difference between RIM and Facebook is that Facebook feeds on the insecurities and other mostly non business emotions of the masses. How many of us resist the joy of putting our vacation photos on Facebook, giving us a sense of pride having lived a good life for a week? RIM and Cisco offer nothing comparable - they are cold economy driven models.
 
Facebook may be the prostitution of the new age, a business thriving on human issues, never to die.


------------
8/1/11
Kiran Shah responds:

we need to remember that RIM / CISCO have patented technology that is difficult to replicate. even if apple grows at current rate, we are talking about a few years before all blackberry can be replaced.


it took facebook only a few months to overtake popularity of ORKUT. can some other ABC company overtake FB , equally likely. how long can FB continue to grow in popularity at the same rate ? is it likely that everyone will have a "super Global UNIQUE ID" - a FB ID? and if that is so, FB becomes a monopoly and any premium is justified !!!

i think its also important to remember that the likes of Goldman (and its super HNI clients ) would put in an insignificant fraction of their wealth on such speculative bets. if they win they make a huge profit ; if they loose, its loose change for them. if they were so committed they would buy a bigger portion and do that quietly. this kind of hype is probably their way of finding buyers for their "Gold mine".

p.s. at least FB are making profit unlike many other shares during .com bubble which were taken up at huge premiums long before the company actually made profit.