Speaking at the Dealbook conference in New York yesterday, Marc Andreesen said that we’re in a tech depression. Tech stocks are cheap. Andreesen said that publicly held technology stocks are trading at the biggest discount to industrials since the 1970s.
For example, Google’s stock price reflects a valuation of zero for their Youtube, Chrome and Android businesses.
Andreesen said, “the public market hates technology.” He feels that we’re in a reverse of the 2000; that the tech crash in the early 2000′s broke investors’ trust that we’re still dealing with today.
According to Andreesen, the market feels that some of these old-line tech companies are doomed. He doesn’t see it this way. He sees global brands sitting on lot’s of cash. He pointed to Apple as a company that many had written off and pulled off an amazing turn-around in the early 2000′s.
Call it what you want: depression or no depression, but some of these old-line tech companies are trading at very low multiples. The market doesn’t like these companies right now. While some may have company specific problems, overall they’re not going away. I’m always interested in looking at unloved sectors for pricing disparities, and it definitely smells like there’s an opportunity here.
You don’t have to be first to be successful, especially when you’re priced so cheaply. The market’s incorrectly priced some of these tech companies and given investors an opportunity.