Dot-profits

SAN FRANCISCO — It's not quite the economic revolution once envisioned by brash entrepreneurs, but a handful of Internet businesses are actually making money.

In breakthroughs that show the promise of e-commerce wasn't all smoke and mirrors, four dot-coms recently reported their first quarterly profits.

The modest achievements of MarketWatch.com Inc., Ask Jeeves Inc., LookSmart Ltd. and Autobytel Inc. reflect the more serious dot-com approach that emerged after the nonsense of Internet mania a few years ago. Remember the days when sock puppets sold pet food on the Internet?

"We used to be up against a lot of stupid money that invested in bad ideas," said Larry Kramer, chief executive of San Francisco-based MarketWatch.com. "Now that most of the bad businesses have disappeared, the remaining companies are getting down to doing some real business."

With their profitable quarters, Market-Watch, Ask Jeeves and LookSmart join other prominent Internet companies that are already in the black.

The list of the Internet's publicly held money-makers include eBay Inc., Amazon.com Inc., Yahoo! Inc., Overture Services Inc., Expedia Inc., FindWhat.com Inc. and E-Trade Group Inc.

Several privately owned dot-coms, including search engines Google and DealTime, say they have been making money, too.

Even more dot-coms are expected to become profitable this year.

Internet analyst Safa Rashtchy of U.S. Bancorp Piper Jaffray believes InfoSpace Inc. and Netflix Inc. will be among the online companies to register their first quarterly profits during 2003.

Meanwhile, Ask Jeeves, MarketWatch and LookSmart are all projecting more operating profits this year.

"Shame on us if we don't keep making money," said Ask Jeeves CEO Skip Battle.

Previous shakeouts in other high-tech fields, such as the personal computer industry, have proven that the early missteps of pioneers point the way to later success for managers who learn from the mistakes.

"Some of these companies are going to survive and become powerhouses," said Internet analyst David Kathman of Morningstar. "Others are going to survive and just become niche players."

The path to prosperity hasn't been smooth.