Model Management: dot-coms rise from the ashes
In its latest weekly column for silicon.com, the team at FTdynamo looks at the dot-com comeback. Is this the start of a new beginning?
Something rather strange is happening in the online world. Dot-coms are starting to deliver on their promises of profitability.
Forget the '99 per cent club' - that band of dot-coms that have had the dubious honour of seeing their shares lose 99 per cent of their value since their peak, such as online directories service Scoot and internet auction site QXL Ricardo.
A new elite club beckons for dot-coms. And the membership requirement? Managing to make money. So far, the club boasts a limited list of players.
One of the first to join was online auction site eBay, and the latest recruit is privately-held US search engine, Google. The company recently announced an operating profit - not just for one financial quarter, but for two. Google is also one of the few companies, alongside eBay, that can still boast about making money from online advertising.
Google's news came less than a week after the once-troubled US travel site Priceline, which offers unsold airline tickets, hotel rooms and car hire, impressed analysts with the announcement that it, too, was in the black. And Priceline is not the only travel firm doing well - US company Expedia has also been performing strongly.
No doubt the faltering US economy and the holiday season have played their part in boosting both Expedia's and Priceline's fortunes, as consumers go online to find cheaper holiday deals. But a recent survey from US research firm Webmergers suggests that dot-com fortunes may at last be on the rise.
The survey found that 32 internet companies have closed down or filed for bankruptcy in July, compared with the June figure of 58. July's figure is the lowest since September last year. Mergers and acquisitions in the internet sector have also been on the rise this year. Webmergers believes that rationalisation in the internet sector may have reached a plateau, and there will be a decline in internet shutdowns.
All eyes will now turn to that hero of the internet world - Amazon, which reported smaller than expected losses for the second quarter. It has yet to make a profit, although it is promising - again - that it will make money in the fourth quarter.