Wall Street eyes Silicon Valley with skepticism

Back in the dotcom heyday, Silicon Valley and Wall Street, despite a historical tension, got on the same page.

At the time, it was all about attracting "eyeballs," which were as good as gold, according to sell-side analysts who convinced--and convinced others--that those eyeballs could be monetized over time. Hence, the many firms that went public with no profits to speak and little revenue.

While some have proclaimed that the Net startup craze had returned with the IPOs of the likes of Facebook, the reality is that Wall Street, to its credit, is much more skeptical this time around.

"Wall Street's evident frustration with the stock price reflects growing concerns about the long-term prospects for companies that are popular but do not charge users for services," notes the Washington Post.

As the Facebook stock shows, it's less about eyeballs than profits right now. Valued by the old metrics in the dotcom boom, can you imagine what Facebook would be trading at right now? Monetizing all those users stands as a huge channel and not all are optimistic.

One Net retailing expert was quoted as saying "Facebook is in a pickle. The advertising broadcast model is dead wrong for this medium. . . . It can never work."

As for Wall Street, analysts and investors are right to be skeptical. But it's a lot less fun being such downers.

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