Here we go again. Technology shares are tumbling and dragging other stocks down with them. Yahoo*, Intel, Motorola - all these and many others are in the news for some reason or other, whether it's job losses or serious share devaluations. Usually the one leads to the other anyway. Oh, woe is us.

Nah, not really. While it's unpleasant news for the employees of such companies - and I write from experience of my better half's near brush with dotcom redundancy - for the consumer and business person this is short-term pain for long-term gain. If, indeed, there's any pain at all.

The technology sector is still grossly over-valued by trading markets. Companies with just three or four employees are still being given valuations of millions of pounds, when what they're creating could easily be duplicated by others within just a few months - and probably will be. It's nonsense, and traders are fast waking up to that fact.

The 'magic' of the Internet is being revealed for what it is; computer hardware and software bolted together to perform a specific task. No more, no less. Take this site, for example, and consider the next two statements:

1) "IT Reviews is a database-driven technology information feed, distributing server-side dynamic product information streams to consumer, SME and corporate ABC1s through a sticky portal interface."

2) "We publish IT product reviews in HTML."

Both are true (I think) but the first sounds so much more exciting if you're a gullible, techno-ignorant stock-broker**.

Companies that took shed-loads of vulture capital money and blew it all on pointless technology, unskilled staff and swanky offices are now feeling the pinch. Many more will vanish before we get to a stage where all the dead wood has been removed.

Panicking day-traders are said to be largely to blame for the share price tumbles, which is sweet irony given that it's the Internet that gave share-dealing access to so many private investors in the first place. Maybe they really are panicking. Or maybe they've just looked a little more closely than their professional counterparts at the simple facts of profit, loss, forecasts and market projections, and made their own decisions.

As for Yahoo's current misfortunes, naming a company after those particular characters in Gulliver's Travels always seemed an odd choice to me.

Tags: yahoo motorola day trader gulliver's travels share price business investing nasdaq