I am in Silicon Valley this week at the head office of the day job. While I have been here it has been good to see that the cold showers here have seemed to have an effect on some of the strageness in tech company valuations. Apple has finally started to drop back in the direction of more sane levels, Ebay has dropped after writing down its overly optomistic valuation of Skype.

Some of the companies that have been undervalued more due to hype rather than true value are starting to come back up. Microsoft, HP, Dell and Symantec have had strong results recently yet have not had the same share price growth as the more hyped, but lower performing stocks. We are yet to see whether the state of the US economy has taken some of the heat out of the M&A activity yet, but it would be good to see a bit more sanity in some of the company valuations being seen.

The interesting side note is that it seems like it is primarily the companies that reside here in the Valley that get the high valuations. There seems to be some framing issues at work in the minds of the valuers, or maybe it is becoming a bit of an insiders game. Considering the realities of the Internet enabled world there is no reason that a physical presence in Silicon Valley should dictate how well a company can compete in the market today.