The internet business model is not flawed. It is how and why many of the internet companies went public was the problem. A few companies have survived the onslaught such as Yahoo.com.

Many folks in the public believe internet companies made no money. This is not exactly a true statement. Many of these companies had earnings, but then decided to go public to compete with their competition. So they sought out investment bankers to become a stock company. Investment bankers do not usually take a company public, and not believe the company has the potential for growth.

CEO's of the internet companies either got too greedy or felt the pressure from the shareholders. The moment many of these IPO's hit the street, the price soon started to run upward, making instant millionaires out of internet executives. Those crazy stock options soon followed. Many of these companies could not keep up with future earnings, so they hired more people. Some of these internet companies had $3,000,000 in sales, but $5,000,000 in salaries and expenses. How could these companies do this? You were living off the equity of the stock. The company was worth $40 to 50 million on paper. When the stock market busted, many of these internet companies were filing Chapter 11. The stock of their company was worthless and they could not pay their employees.

Other companies such as Yahoo and Amazon.com were able to survive the internet stock bust. Maybe the search engine, type company is a more sustainable business model. Amazon.com may not be a search engine in the traditional sense, but it's online shopping market. Get ready there will be more internet stock companies coming soon. The internet is still in its infancy.

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