By CLAIRE CAIN MILLER
ASPEN, Colo. — Frank P. Quattrone is the banker who helped set off the dot-com boom when he took Netscape public in 1995. Today he is having flashbacks.
Tony Avelar/Bloomberg News
Frank Quattrone’s investment banking firm advises companies on acquisitions and other business matters.
Answering the question on the tip of everyone’s tongues in the tech world — is there a bubble? — he said that current times remind him not of the height of the last bubble but of the early days of the boom.
“It really feels to me more like 1995, which is the beginning of a new era of I.P.O.’s,” he said at Fortune’s conference here. “The new era is called social, local, mobile, real-time.”
Shares of Web companies that have recently gone public, from LinkedIn in May to Zillow on Wednesday, have surged in the first day of trading, reminiscent of the dot-com bubble. But Mr. Quattrone said that is probably because so many investors want to invest in social networking companies, just as Netscape attracted investors desperate to own shares in a Web company. It was not until four or five years later than investors started speculating and the bubble peaked, he said.
“If people wanted to invest in Web, that was the only stock they could do it, so Netscape’s market value was higher than it probably should have been, and people could probably say the same thing about LinkedIn today,” Mr. Quattrone said. “LinkedIn is the Netscape of its era.”
Mr. Quattrone, a star investment banker of the dot-com era who was sidelined for four years as he fought and beat obstruction of justice charges, is staying out of I.P.O.’s this time around. His young investment banking firm, Qatalyst Partners, advises big and small companies on acquisitions and other business matters.
He has quietly been involved in many recent deals, including the sale of National Semiconductor to Texas Instruments for $6.5 billion, the sale of PopCap to Electronic Arts for $750 million and the sale of Zong to eBay for $240 million.
One sign that we might be approaching another bubble: if companies start manufacturing new metrics to replace profits, like “a multiple of engineers,” he said. “When you see stuff like that happen, it’s time to put a big short on the market.”
Some companies in the local business are asking investors to trust that they can grow based on success in one city. “A lot of cohort analysis has crept in,” he said. But over all, he is not worried. “It all comes down to good old free cash flow, and I think that’s just healthy,” he said.
One company that is not yet profitable in which Mr. Quattrone has faith: Twitter. He doubted its usefulness at first, he said, but was convinced when his daughter was in New Zealand when an earthquake hit and Twitter gave him information quicker than any other Web site.
“Twitter has a several-hour advantage in getting information,” Mr. Quattrone said. “I don’t follow any particular periodical anymore. I use Twitter as my customized news feed.”
Frank Quattrone Is Having Flashbacks to the Bubble - NYTimes.com
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