Dot.coms under the hammer

More than 300 people pack into a ballroom for the auction

By Maggie Shiels in Silicon Valley

As more and more dot.coms go to the wall, public auctions have become a weekly ritual in Silicon Valley.

But for other high tech start ups, they have become "bargain central". State-of-the-art equipment, purchased by the now-failed companies with investor dollars, is sold off for a fraction of the cost.

It is like the new economy reinvented work into play and I guess play didn't pay so we are selling off their remnants

Don Cowan, auctioneer

In the run-up to one of these major auctions, in Sunnyvale 40 miles south of San Francisco, prospective bidders had two days to inspect the remnants of six failed dot.coms in a cavernous warehouse.

The equipment came from dot.coms that had dealt in everything from online car sales to billing applications to buying optical equipment over the web.

Aladdin's cave

The barely lit building was like an Aladdin's cave with shelves groaning under the weight of computers, servers and monitors all awaiting a new home.

Pieces going under the hammer range from computers to nerf guns

The atmosphere resembled a church. People spoke in hushed voices trying to ensure no-one would know what items they were interested in.

On the face of it there seemed to be plenty of hardware to go around.

In all, over 1,200 pieces were due to go under the hammer.

Don Cowan of Cowan Alexander Equipment Group, one of America's biggest auction houses, reeled off some of the coveted lots.

These people's demise is our benefit because we get the equipment for probably about a third of the price that we can buy new

Giovanni Paliska, Arkivil software

"We have a couple of hundred notebook computers out there. We have a lot of systems from Hewlett Packard, Dell, Compaq and we probably have 500-plus computer systems. We have high end Sun and HP servers and then we have networking from Cisco. We have chairs, we have office furniture, fax machines, photocopiers."

Toy town

And let's not forget the toys that many dot.coms splashed out on to create a relaxed working environment and keep the desk slaves happy.

"Right here," says Don Cowan, "we have a basketball hoop from a dot.com and pretty much every time we do a dot.com you find air hockey tables, football tables, pool tables are very popular, nerf guns and indoor basketball hoops. It is like the new economy reinvented work into play and I guess play didn't pay so we are selling off their remnants."

Don Cowan (right) of Cowan Alexander Equipment Group, one of America's biggest auction houses.

Much to the joy of people like Giovanni Paliska and Albert Leung who came shopping for a good deal on a couple of servers and computers for their new start up software company called Arkivil.

"These people's demise is our benefit because we get the equipment for probably about a third of the price that we can buy new", says Giovanni Paliska.

Partner Albert Leung acknowledges that for a new company like theirs, these auctions make good business sense.

"As a start up we need to conserve money so we try to pay as little as possible."

Going, going... gone

At the auction itself, it was standing room only as more than 300 people packed into the ballroom of the Sheraton Hotel.

Presiding over a seven hour marathon selling session was Don Cowan's partner Adam Alexander who maintained a sense of humour from the outset.

It is just the business, something dies and something has to give birth to something else

Daniel Larks, Golden Bear Moving & Storage

"Everybody needs a paper shredder," he joked. "We have 1,200 computers and we sell you lot number one, a paper shredder because we figure if you're going to make a mistake you'd better make a mistake here."

The blunders made by the dot.coms has resulted in a boom time for auction houses like Cowan Alexander.

Adam Alexander admits he does so many auctions he rarely knows the name of the company or what it did.

"Last year our company assisted in the liquidation of 44 dot.coms, by the end of March this year we will have done another 21 and we are probably working on another 30 right now."

Dot.com staff are the last to know

Auctioneers are not alone in cashing in on the death of the dot.com dream.

Daniel Larks works for Golden Bear Moving and Storage.

"Right now we are shutting down two or three dot.coms a week. We go in when people go out for lunch to make sure the assets stay there. Most of the time the staff don't know the company is shutting down or that the investors have pulled the plug."

Dot.com failure is good news for start-ups as they can buy equipment at knock-down prices.

There is no doubt a lot has happened in a year.

Last March the Nasdaq stood at over 5,000 points while today it is below 2,000.

Webmergers, a tracking company, says since January 2000, 270 dot.coms have gone belly up. 70% of those failed in the past four months.

At the auction there was little sympathy for the thousands of dot.commers given pink slips or redundancy notices after burning through millions of dollars.

"It is just the business, something dies and something has to give birth to something else," says a pragmatic Daniel Larks , flicking though an auction catalogue.

All of which proves that one person's pain is another person's gain.