The Web Is Finally Catching Profits

For once, the ever-tart Web site F**kedcompany.com, which keeps track of the death struggles of troubled companies, didn't have something nasty to say about a dot-com in its crosshairs. "Hey look," the site's proprietor, Philip Kaplan, noted in a posting on Jan. 28. "FC favorite Looksmart.com posted a profit. Weird." Indeed, LookSmart Ltd., a search engine company, bagged its first quarterly profit, $3.4 million on $31 million in sales.

In spite of the wretched economy and molasses-slow corporate spending on technology, profitable Web companies are no longer weird or even unusual. The tally of profitable Internet companies in the fourth quarter reached 84--more than 40% of the 208 publicly traded Net companies tracked by stock researcher Pegasus Research International LLC. That's up from 49 profitable dot-coms for the first quarter of 2002, the last time BusinessWeek conducted such a survey. In key areas such as e-tailing and online finance, profitability has become the rule rather than the exception. And those profits are measured by generally accepted accounting principles--no "pro forma" tallies need apply.