James Altucher, a managing partner at Formula Capital, says the Internet is dead as an investment. He says the days of infinite margins and and high growth are long over for the Internet. His argument is that nobody can figure out a business model.
He uses Time Warner as an example. “Time Warner would rather keep their legacy old-media businesses like People magazine than hold onto one of the biggest Internet companies out there, AOL. And News Corp. is shaking up its MySpace business as it figures out its next steps.” He also mentions that Facebook and Twitter are struggling to make a profit and Google is doing so well because it got lucky with AdSense.
Mr. Altucher does not say much to back up his point. He says he would rather tell clients to invest in utility companies and companies that are “rebuilding the country” than Internet companies. He says that in this economy, we should be going back to the basics and invest in companies that help us spend the stimulus.