Trouble for tech in market sell-off


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The double-whammy of the S&P downgrade of U.S. government debt and double-dip recession fears is turning into a real downer for tech stocks.

The Nasdaq fell nearly 7% on Monday, even peeling some of the glow from Wall Street darling Apple.


But few tech companies have been as hit as hard as LinkedIn in the market sell-off. The first major U.S. social networking company to go public beat analysts’ estimates for second-quarter earnings last week. But the stock fell more than 17% in trading Monday.

LinkedIn was not alone. Other tech companies that recently went public also fell. Does that mean the initial public offering window for tech companies could slam shut again as investors look for safer bets?

‘I don’t think anyone has a good answer on that yet, it’s too raw and too new,” Deutsche Bank communications technology analyst Jonathan Goldberg told VentureBeat. ‘In general, market conditions are going to make it hard for any IPO to come out.’

That could spell trouble for social gaming company Zynga and daily deals website Groupon, both of which have filed to go public. It could also postpone IPOs from other prominent players such as Yelp.

That, in turn, could have a chilling effect on the tech boom in Silicon Valley that has seen investors throw billions at start-ups.

Could another global meltdown trigger a repeat of Sequoia Capital’s 2008 ‘RIP Good Times’ presentation? That’s when the venture capital firm invited about 100 executives from its portfolio companies to give them a sobering overview of what the economic crisis meant for Silicon Valley and their start-up dreams.



What recession? It’s boom time again in Silicon Valley

LinkedIn earnings beat expectations

Web 2.0: Rest in peace

-- Jessica Guynn

Image credit: Sequoia Capital