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Swiss "dotcoms" face a leaner future

Fantastic is one of Switzerland's dotcom success stories

(Keystone)

The much-vaunted "New Economy" has taken a bashing in recent months, and Switzerland's dotcoms have been no exception, with names such as Miracle going to the wall after nervous investors headed for the exits.

Technophobes could have been forgiven for a little quiet gloating as precocious dotcoms crashed and burned last year.

The most spectacular failures were in the United States, but Swiss firms, too, experienced their share of grief.

The most high profile casualty was the hi-tech firm, Miracle, which folded after its creditors refused to allocate second-round financing.

With the benefit of hindsight, it's easy to see why hi-tech firms suddenly crashed to earth after their short but spectacular reign as the darlings of the Stock Exchange's New Market.

Davide Gai, an analyst and president of Ticino Informatica, told swissinfo that most dotcoms had no sound business plans, or services and products to sell. He said investors were driven by the herd instinct, and failed to judge the stock objectively.

"We are talking about an unnatural growth - a growth that had no roots in [financial] fundamentals: namely the customers' wishes, the soundness of the idea and the viability of the business plan. There was no [investor] discrimination between good and bad companies," Gai said.

The high-tech firm, Fantastic, which is based in Zug, is one Swiss success story. It was listed on the German Neuer Markt in September 1999. Today its turnover stands at $23 million.

But while Fantastic survived the hi-tech crash, it did not come out unscathed. Ninety-seven per cent of its stock value has been wiped off its March 2000 high of SFr10 billion ($6.13 billion).

Fantastic's survival can be attributed to the fact that it had a sound product and reliable financial backing, said Jürg Bollag, head of mergers and acquisitions.

"During the net economy boom anyone could come to the market with just a business plan, with just an idea. I think Fantastic was different. We had a finished product that worked, that had been sold worldwide, and we had an impressive customer base in terms of the size and importance of our clients," Bollag said.

As hi-tech firms have collapsed, the euphoria that pushed hi-tech stocks to their dizzying heights last year has become more tempered. But Davide Gai believes that operators and investors in the "New Economy" are still not being cautious enough.

"This is a field like any other field," Gai said. "E-companies should behave normally and fulfil customers' and shareholders' expectations."

by Samantha Tonkin


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