'Dot-Bomb' Stuff Could Be Another Firm's Treasure

Computerworld - It wasn't supposed to be like this. The Internet dreams were real, especially for San Francisco-based StockPower Inc. It was going to streamline employee stock purchase plans by using the Internet. It had even lined up customers such as Home Depot before closing shop in October.
Instead, everything the company owned or leased went on the block.
StockPower was one of more than 130 dot-coms to go bust last year, and if what Stefanie Schwaderer said at a recent auction in San Francisco is any indication, there will be many more closures. "We did about 40 of these dot-com auctions last year," says Schwaderer of Cowan Alexander, the auctioneers. "Right now, we're doing two a week."
More than 300 people piled into a hotel in San Francisco's Chinatown to see what bargains the dot-com flameouts might offer.
How about a 600-MHz Compaq DeskPro PIII with 512MB of RAM and a 10GB hard drive? It will cost you $625. Want an NEC Vista Scan 7000 17-in. monitor? You can buy 14 of them for $150 apiece.
These auctions - and those online - are where the rubber meets the balance sheet, erasing millions of dollars in venture capital investment. At StockPower's auction, Comdisco Ventures, the company that leased equipment to StockPower, was trying to recoup some of its money.
An auction of a defunct dot-com's stuff is also a place that IT buyers should visit before approving any purchase order. It quickly becomes apparent that anyone willing to pay full price for IT equipment must be mentally challenged.
These auctions aren't just for consumers.
Christopher B. Dolan, head of The Dolan Law Firm in San Francisco, said he was shopping for his 17-person firm.
"This is what happens as a result of all the excess, the poor business planning of these dot-coms," Dolan said, pointing to a picture of a Dell 17-in. flat-screen monitor that was up for bid.
Dolan saw deeper meaning, noting that each piece of equipment represents a person without a job and a loss for stockholders. "What were the dot-coms and their investors thinking?"
And if you thought this auction was only for small companies, how about a Sun Enterprise 4500 server with dual 400-MHz processors? The winning bid: $19,500. (A new one costs as much as $50,000.) There were eight Sun 17-in. monitors that would set you back $25 to $50 each, less than the price of a Friday night beer blast.
In addition to the obvious savings that such auctions can offer IT buyers, theundertone is ominous: There are simply tons of equipment to sell, equipment now competing with new stuff made by brand-name companies. Prices will continue to fall as more products, such as a Cisco Catalyst 4000 switch (winning bid: $5,000, compared with $7,500 on the Web), find new owners.
The dot-com downfall means more auctions and more layoffs, but for IT buyers, it should mean discounted prices for a long time.
Pimm Fox is Computerworld's West Coast bureau chief. Contact him at pimm_fox@computerworld.com.

Read more about E-business in Computerworld's E-business Topic Center.