High-Tech Meltdown

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Webvan.com, like many other Internet businesses, hit near its all-time low on the stock market Friday.

Ronnie Moore, who delivers for the Internet grocer (in which CBS has a financial stake), felt some of the pain. Like just about everybody else in the dot com business, part of his pay comes in stock options.

So for Webvan CEO George Shaheen, Friday was a day for steadying nerves, reports CBS News Correspondent John Blackstone.

"At the end of the day there will be a group of tall trees left standing. Webvan will be one of those," said Shaheen.

In the dot com world, Webvan has been one of the rising stars. Just Thursday, the company reported a healthy increase in sales. But in Friday's market collapse, Webvan shares fell below $6 from a high in November of $34.

"You cannot become a slot machine manager, so to speak, and overreact," Shaheen advised.

Like most other Internet companies, Webvan is losing money, about $200 million a year.

For most money-losing Internet companies, high stock prices have been both the fuel for growth, and a reward for workers in the form of stock options

"They had the illusion of wealth," says economist and CBS MarketWatch consultant Paul Erdman.

He says Internet workers have just received a big dose of reality. "So it's not just that your stock options have gone up in smoke. It could be a year from now, your job will also go that way," says Erdman

After the stock market slaughter, analysts are now watching for dot com companies to start disappearing, whether selling out to a leader, or pairing up with a competitor.

What seems surprising is how quickly the dot com mood has changed. But then, many of the companies that took a beating today have been reminding us that the world now moves at Internet speed.



  • CBSNews.com staff CBSNews.com staff

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