A timely reality check
A number of unprofitable tech companies have launched initial public offerings in U.S. capital markets since the beginning of 2006, and more than half the tech companies now in the IPO pipeline are in the red. The trend recalls the dot-com boom of the late 1990s, when deeply unprofitable tech concerns -- often with no clear business models -- were snapped up by eager investors as soon as they hit the market.
Profits never materialized for many of those tech companies, an outcome that helped fuel the Nasdaq stock-market meltdown in 2000. In the aftermath, thousands of tech workers were laid off, and several Wall Street firms were accused of misleading investors by boosting the dot-coms, leading to a string of market reforms.