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Letter to the editor

Bay area's dot-com outlook rational

By MADHUSMITA BORA, Times Staff Writer
Published October 18, 2007

While Silicon Valley may be going like gangbusters in gobbling up smaller companies for the mighty bucks, investors in the Tampa Bay area are treading cautiously.

So there's no fear of another reinflated bubble leading to a bust here.

At least not yet.

"Just as in 1999 and 2000 where we didn't see an excessive run in this market, we see here companies that are doing well also have nice valuation, with good cash flow and consistent earnings and revenue growth," said Tom Cardy, managing director at Hyde Park Capital Partners LLC in Tampa.

During the glory days of the boom, Cardy served as executive vice president and chief financial officer of Preview Travel, an online travel service. Travelocity.com bought the company for $600-million right before the downturn. Back then the valley was ebullient, Cardy said.

"People were throwing money and saying don't worry about making or losing money, but grow market share," he said. "It was like a land grab."

But while the West rose and fell with the tech tide, the Tampa Bay area sauntered along. Perhaps what infuses stability in this market is that unlike Silicon Valley or Boston, it's still not a breeding ground for tech startups, said Bob Dutkowsky, CEO of Tech Data Corp.

"You don't see serial entrepreneurs here like you see in Boston and Silicon Valley, and that leads to a more stable economic environment," Dutkowsky said.

Balaji Padmanabhan, an associate professor at the University of South Florida's College of Business who recently moved here from the Wharton School in Philadelphia, believes that the recent buying spree by cash-rich players such as Google, Yahoo and eBay shouldn't be equated with the irrationality of the pre-bust era.

"Back then, it was pretty much any random person scooping up IPO initial public offering shares for companies with names such as cutmylawn.com," he said.

But this time around, the investors are companies that have established themselves, he said.

"They are now trying to position themselves for the next push," Padmanabhan said. "And they have a vision that they are willing to bet on and pay for a better future."

Madhusmita Bora can be reached at mbora@sptimes.com or (813) 225-3112.

[Last modified October 17, 2007, 22:42:47]