Dot-Com Death Spiral

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The stock prices of many of last year's dot-com darlings are down as much as ninety percent. The gyrations of the markets may seem like a distraction from day-to-day business, but that's not the case in the New Economy, where stock is the main currency for compensating staff and consolidating competitors.

Sinking shares turn yesterday's acquirer into today's acquiree. Falling values also render employee stock options the ability to buy company shares at a predetermined price, hopefully much lower than where it trades into a cruel joke. Worst of all, cheap shares cut off new supplies of cash that are needed if a money-losing company hopes ever to build a sustainable business. The latest example of an unwelcome dot-com is Altavista, which on Friday pulled a public debut scheduled for this week.