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Tech stocks bomb to cash boxes

THIS year has been one of the toughest in memory for market investors scrambling to make headway after the tech wreck of April 2000.

Just how badly the market has turned against technology, particularly Internet and electronic versions of it, and focused on the blue chips can be seen in the total shareholder returns (TSR) results for 2000-01.

As opposed to the same survey in 1999-2000, when WA’s miners who turned to tech stocks basked in the glory of their decision to shun resources, there are a number of notable disaster stories among this group for the financial year just passed.

For example, take a look at Aussie Online whose TSR was -92.7 per cent, My Casino which was -92.6 per cent and Pilbara Mines, a one-time market darling, which had a TSR of -88.8 per cent, according to Trudo.

In some companies with similar stories such as these, many shareholders have written off their investment as a bad decision that will never bear fruit.

But, far from walking away from their money, investors ought to be watching these companies closely.

With many good ideas seeking venture capital at the moment, there is frustration among some market players that cash raised more than a year ago is not being used – other than for the payment of directors’ fees in some cases.

Trudo managing director Anthony Wooles echoes the thoughts of many people in the market regarding the current state of many former tech stars, which have become virtual cash boxes.

“A number of these companies still contain significant levels of cash raised through various placements and rights issues and will emerge in another form altogether as directors look to extract something from the ashes of failed business plans,” he said.

“Those shareholders who have not already written off their investments should continue to monitor quarterly cashflow reporting and question directors on future strategies.”

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