When Yahoo! Was Worth More Than Intel

Just like in the Clinton administration, companies with uncertain prospects are attracting insanely high valuations.   What else could explain the $25 billion market capitalization of Groupon, the online coupon service that went in business  in November 2008 which now reportedly has a revenue run rate of about $2 billion?  The 1,500-person company is worth to investors almost as much as FedEx Corp. , which incorporated in 1971, employs more than 285,000 workers and generated $34.7 billion in revenue last year.  Maybe it’s because Groupon reportedly had the audacity to turn down a $6 billion buyout offer from Google Inc.

Who knows?  That’s the point with tech investing, or any other types of investing,  no one really knows what the future holds.  Who would have thought back in 1999 that Microsoft Corp. would no longer be the world’s most valuable company in 2011?  The software maker’s market share tells the story.  In 1999, Microsoft was the most valuable company on earth, valued at $583 billion.  The Redmond, Washington company is worth $212.58 billion today.  Interestingly,  Exxon Mobil Corp., currently the most valuable company, is worth $411.17 billion, less than what Microsoft was worth at the height of its value.

Other names from the dot-com bust either got swallowed up by larger rivals like Sun Microsystems Inc. (NASDAQ: SUNW), worth $116 billion in 1999, or have only a fractions of their former market capitalizations like Yahoo! (NASDAQ: YHOO), worth $113 billion at that time.  In 2009, Oracle Corp.  (NASDAQ:ORCL) acquired Sun Micro for $7.4 billion.  Yahoo is now worth about $21 billion.

Apple Inc.  (NASDAQ:AAPL) came out of the dot-com bust worth a measly $17 billion and now is valued at $311.94 billion, thanks to the spectacular success of the iPod, iPhone and iPad.  Not bad for a company dismissed as a niche player back in the day.

Today’s Internet hero can be tomorrow’s zero (Friendster and MySpace) in the click of a mouse. 24/7 Wall St. decided to show the phenomena in the following chart.

Biggest U.S.  Companies By Market Cap (24/7 Wall St.  Real Time 500 3/21/11,  1999 Data Courtesy Capital IQ in bold.)

Private Market Values of Today’s Hottest Companies
Facebook — $75 billion (compares to Amazon.com (NASDAQ: AMZN) — $74.3 billion)
Groupon — $25  billion (compares with FedEx Corp.  (NYSE: FDX) — $28.4 billion.)
Twitter — $8 billion (compares with Limited Brands Inc.  (NYSE: LTD) – $10.8 billion.)
Zynga — $9 billion ( compares to  Harley-Davidson C0.  (NYSE: HOG) — $9.6 billion)