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	The Year in Review Introduction The Top Investing Stories The Winners The Losers Our Greatest Hits What We've Learned Investing Opportunities in 2001 The Worst of "Investing 2000"

From AOL's acquisition of Time Warner to the extended presidential election, this year was a roller-coaster for investors. As 2000 draws to a close, our writers review the top stories of the year, and consider what's next in each case. Join us as we relive the year gone by, and prepare for the new one!

AOL, Time Warner Ring in the New
By Nico Detourn (TMF Nico)

The new year began with America Online (NYSE: AOL) and Time Warner (NYSE: TWX) dropping the $160 billion bombshell that, as the year ends, is still reverberating across the new media and old media landscapes. The companies' proposed merger, at that time the largest ever, would in fact unite those two landscapes, creating what the pair oh-so modestly called "the world's first fully integrated media and communications company for the Internet Century." Which means what, exactly? Basically, it means applying AOL interactive know-how to Time Warner properties that reach across the media spectrum and run several decades deep.

Together, the two companies have well over 100 million paying subscribers, including AOL's dialup customers and Time Warner's cable TV and magazine subs. Time Warner, of course, is also one of the world's largest producers and distributors of film and television entertainment, music, and news -- an intellectual property factory second to none. AOL, in addition to its flagship service, develops an assortment of Web services and Internet applications through which Time Warner's output can easily be channeled. Their combination has "cross-promotion" and (dare we say) "synergy" written all over it.

The deal also spells controversy. Concerned competitors and consumer groups have said the combined AOL Time Warner could wield too much power, with too little self-restraint, over the world of brave new media. Regulators on both sides of the Atlantic have heard and shared those concerns. Not unexpectedly, concessions were demanded and made along the path to approval.

It's at times been a cantankerous process, but the merger-mates have jumped all but one final hurdle -- as we write, the Federal Communications Commission is deciding what conditions the companies should meet in exchange for its thumbs up. The deal was expected to close by the end of this year, and may yet do so, which would bring the wrangling to an end. The reverberations of the deal, however, will be heard long after the ink dries.

The Microsoft Anti-Trust Case
By Bill Barker (TMF Max)

On June 7, District Court Judge Thomas Penfield Jackson issued his final ruling in the Microsoft (Nasdaq: MSFT) antitrust case and called for a break-up of the company. The ruling split Microsoft into two separate units: an operating systems company and an applications software company. Microsoft appealed the case, and after an unsuccessful attempt by the Department of Justice to take the appeal straight to the Supreme Court, the case now sits before the District of Columbia Court of Appeals.

It's hard to separate what percentage of the drop in Microsoft's share price this year (about 60% as of December 22) is attributable to the cloud of uncertainty hanging over it as a result of the break-up order, and how much comes from the general tech meltdown. One ray of sunshine that might have cropped up for Microsoft is the election of George W. Bush, who promises an administration less aggressive than President Bill Clinton's when it comes to antitrust matters.

Tempering any benefit from the change in administrations, however, is the fact that regardless of the lead from the White House, a number of state attorneys general will continue their pursuits against Microsoft. Given that, and the fact that the decision of the Court of Appeals will not likely arrive until summer, and will then doubtless be headed to the Supreme Court, Microsoft shareholders will continue to own a company with a distinctly unclear future throughout 2001.

The Bursting of the Internet Bubble
By Paul Commins (TMF Buster)

What can we say about the dot-com collapse that hasn't been said already? Garden.com? Gone. Pets.com? Gone. Petstore.com? Guess. Furniture.com? Gone (taking the Amazon.com (Nasdaq: AMZN) furniture shop with it). Kibu.com, Eve.com and MotherNature.com? Later, gals. Clickmango.com, Living.com, Hardware.com, Toysmart.com, Boo.com... the list goes on.

It's tempting to view it all as the natural outcome of the consolidation that follows any economic boom. The Internet boom, in particular, was epic because the technology itself promised such a fundamental shift in communications and culture. A year ago, everyone claimed to know -- but nobody really knew -- what the economic impacts might be. What gold mines might emerge? A mad rush ensued.

If you work, once worked, or just invested in the dot-com world, chances are you are a little defensive these days. If you were cuttingly dismissive of the "fad" from day one, chances are someone has used "gleeful" in describing your behavior lately.

The bottom line, though, is that market volatility is a function of the unknown. Now that something has actually happened, and most of the economic unknown has been dispelled, we run into an awful lot of people who "knew" it all along, but the fact is that more didn't than did. The proof is in the numbers. We all knew that there would be many more bombs than survivors, but nobody was really sure which was which (except you, of course). That's a big part of the truth behind the bubble burst.

There's one more major hunk of truth, however.

What really is surprising isn't so much the collapse of so many pretenders but the shaky status of the survivors. All the companies listed as "winners" in our 1999 End-of-Year Special are still around but all have had a very tough 2000.

Yahoo! (Nasdaq: YHOO), CNET (Nasdaq: CNET), and -- to some extent -- America Online (NYSE: AOL) are suddenly wrestling with a major lull (complete collapse?) in the Internet advertising market. Amazon, the lone remaining e-tailer of any size, is betting the farm on a slow Christmas season. CMGI (Nasdaq: CMGI) is learning that a whole lot of nothin' adds up to nothin'. eBay (Nasdaq: EBAY) looks like the most solid business model in the bunch, but it's down over 50% on the year, trailing even the vanquished Nasdaq composite. Come to think of it, all six of these stalwarts are down over 50% on the year.

Maybe there ain't so much gold in them thar' hills after all?

The Humbling of the Nasdaq
By Chris Rugaber (TMF Chris)

The mighty Nasdaq, a home to most of the so-called "high-tech" companies much beloved by investors in recent years, and an index that soared over 80% in 1999, was finally brought back to earth this year. After continuing its torrid growth for the first couple of months of 2000, it gave investors a taste in late March of what was to come, as high-flyer MicroStrategy (NYSE: MSTR) was rudely reminded (thanks to a one day drop of some 60%) of the importance of getting its financial statements straight.

Yet this year's 38% drop in the Nasdaq -- its worst ever -- was a result of much more than just accounting irregularities or the dot-com implosion (see previous article). Companies that once seemed invincible -- Microsoft, Intel (Nasdaq: INTC), Cisco Systems (Nasdaq: CSCO), and Sun Microsystems (Nasdaq: SUNW), to name the most prominent examples -- suddenly showed sustained weakness (or at least their stocks did) for the first time in recent years. These four companies, in many ways the architects of the PC and Internet explosion of the latter half of the 1990s, all posted negative returns for the year, a rare occurrence indeed. Microsoft dropped 60.2%, Intel was off 19.9%, Cisco slumped 22.5% and Sun shed 17.7% (as of December 22).

Some questions for investors are: Does this portend more sober valuations for tech-related companies in 2001? Do these share declines reflect the much-ballyhooed shift away from PCs? Is it a reflection of the increasing competition faced by Intel, Sun, and Cisco, in particular? Regardless, investors in these companies probably face a more volatile 2001, now that these gorillas have been taken down a notch.

Fair Disclosure: SEC Fights for Individual Investors
By Bill Barker (TMF Max)

In a move that was celebrated by individual investors everywhere, the Securities and Exchange Commission (SEC) voted on August 10 to pass Rule FD (Fair Disclosure), effectively ending the era of selective disclosure. Selective disclosure occurred whenever companies released material nonpublic information to individuals, typically Wall Street's securities analysts and other institutional investors, before disclosing the information to the general public.

According to the SEC, during the comment period the proposed rule prompted an "outpouring of public comment -- nearly 6,000 comment letters. The vast majority ... were from individual investors who urged -- almost uniformly -- that the Commission adopt Regulation FD. These investors expressed frustration with the practice of selective disclosure, believing that it places them at a severe disadvantage in the market."

Though the entrenched and well-financed powers on Wall Street put up a big fight, lobbying the SEC to continue allowing the practice of selective disclosure, the public interest won out. Since Wall Street's analysts are, in large part, paid mostly to promote the interests of the companies they follow (read this amazing SmartMoney article for details of one example) and are not necessarily well-trained to research and analyze companies without the benefit of inside information, it is quite likely that a lot of analysts will now soon be looking for a new line of work.

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