Fire Sale: Dead Dot-Coms Auction Wares

March 19, 2001 -- If you're wondering what became of all that money you spent on dot-com stocks, look no further than a warehouse in Santa Clara, Calif.

That's where a mountain of computer equipment from bankrupt dot-com companies in Silicon Valley is being stored, awaiting a buyer at auction.

Look around and at any given moment you can see the residue of Web sites that are now just a memory: companies like Bestoffer.com, Greenlight.com, Redgorilla.com, and more.

But unlike most auctions, many of the wares on display here are practically new. Some of the computers are fresh out of the box. And instead of being a sale of scarce goods, there's plenty more where this high-tech stuff came from.

Going Back in Time

When Larry Kearns, a prospective shopper looking for bargains in the warehouse last Thursday, booted up a confiscated computer from a now-defunct company, he felt like he was looking back in time.

"This ends on February 9 at 8:30 in the morning," said Kearns, noting when the worker using the computer must have last turned off his machine.

Indeed, the possessions of some dot-coms go from the office to the auction block within weeks.

For entrepreneurs, going out of business is a fact of life. And for those wandering through confiscation warehouses, it's not much different from walking through a salvage yard and finding fascination in debris from bad wrecks.

"Part of this is seeing the demise of the money culture and how much wealth there is," added Kearns.

Or, as is the case here, how much wealth there was.

Pennies on the Dollar

On Friday, at a hotel in Sunnyvale, not far from Santa Clara, the possessions of Bestoffer.com, a former used-car Web site, were sold to the highest bidders.

Don Cowan, a partner at Cowan Alexander Equipment Group, which arranges auctions of high-tech equipment, helped organize the auction and estimated that up to 500 people assembled to buy about half a million dollars worth of goods.

That includes computers, servers made by Sun Microsystems, routers and networking equipment from Cisco and office equipment, including phones and chairs.

According to San Francisco magazine, there have been 51,000 layoffs in Northern California's Internet sector in the last year — meaning there are still plenty of used goods on the market.

Cowan estimates that on Friday, a typical used laptop in good condition could have been had for "anywhere from 40 to 60 percent off what you could have bought it for in a store."

Business Booming for Tech Auctioneers

Cowan says his company handled 44 auctions of bankrupt dot-com companies last year, and he expects that figure to be much bigger in 2001.

"In the first quarter of 2001, we'll have done another 21," says Cowan. "And we probably have another 20 stacked up."

But Cowan acknowledges there are only so many ill-conceived or poorly run dot-coms left to be shaken out, adding that business has "probably plateaued." Many tech companies are declaring bankruptcy and reorganizing rather than simply going out of business.

Still, the resale of all this high-tech equipment could yet make a dent on the bottom lines of some of the biggest computer hardware manufacturers — including Sun and Cisco — who could see demand for their products drop in the near future.

But those aren't the only items you can have for cheap at your basic Silicon Valley auction. There are also the seemingly inevitable toys associated with dot-com offices, as well.

"That's the one thing you notice about every dot-com company," adds Cowan. "They have a foosball table, ping-ping tables, pool tables or those indoor Nerf hoops. We see a lot of Nerf bow-and-arrow sets, too."

ABCNEWS affiliate KGO-TV in San Francisco and ABCNEWS.com's Peter Dizikes contributed to this report.