In a stark reminder of the difference between a great idea and a great idea that makes money, shares in some of the leading social media brands plummeted this week, which has proved to be a week of contrasts for technical stocks.
Meanwhile, at the more prosaic "metal-bashing" end of the tech spectrum, a couple of the major players fared rather better.
Over the past three months, New York's Nasdaq exchange has seen a rise of 10 per cent. By contrast, over the same period (since floating on Nasdaq on 18 May) Facebook has lost almost half its value. Its fortunes continued in a downward direction this week after a three-month lockout applied to early Facebook investors expired on Thursday, flooding the market with more than 270 million shares and causing Facebook stocks to hit an all-time low of $19.69 (£12.54). Facebook's IPO now ranks as "the worst performer among all large IPOs on record", according to Bloomberg.
Facebook was not alone in its torment. Last year's stockmarket darling Groupon also suffered a big drop – despite finally turning a profit. On Tuesday, following the release of its second-quarter results, Groupon's stock fell dramatically by 27 per cent to $5.51 (a drop of more than 70 per cent since its IPO) on Tuesday. Since then it has continued downwards to around $5.00 per share yesterday, with analysts voicing concerns that the firm has run out of steam.
Both of these stocks are underwritten by the bank Morgan Stanley, which is also a major shareholder in Zynga, the social games service. Zynga has lost about 70 per cent of its value since going public last year and shares now change hands at around at $3.00 – although this week has been relatively quiet. All of these flotations have suffered from the relatively short lockout of shares leading to a flooding of the markets and a dip in prices.
But if social media firms, or more particularly their investors, are having a bad time of it, the opposite is true for Lenovo and Cisco. Lenovo's Q1 results show profits up 30 per cent to $141m (£90m) with a global market share of 14.9 per cent, taking the firm very close to HP's 15.5 per cent. Most of the company's growth was seen in emerging markets such as India and Brazil. Lenovo has also become the second-largest player in China's enormous and growing smartphone market, and CEO Yang Yuanqing has claimed the company is unconcerned by Microsoft's forthcoming Surface tablet, saying that his company had "much better hardware".
Then there is Cisco. Following some aggressive cost-cutting measures (including the loss of 7,800 jobs), price reductions and strategic acquisitions, the network equipment manufacturer this week boosted its dividend by 75 per cent and forecast sales and profit that exceeded the expectations of analysts. The vendor's stock rose 9.6 per cent to $19.02 (£12.10) on Thursday, and is up 5.2 per cent this year.
Wrapping up the tech stock news, Google and Apple also closed up on the week.
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