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Markus Gaertner

The dotcoms are back. Five years after the tech bubble burst, a new generation of dotcom companies is emerging, armed with lessons from the expensive failures of  its predecessors.

Websites are again changing hands for large sums in an apparent revival of  dotcom fever.

But there are three big differences from the 2000 bubble.

Some of the new thriving e-businesses are focused on gambling, based in tax havens, wildly profitable and at the base of a growth curve that might lead them to unimaginable heights in five years.

Others survived the crash with good business models and steady revenues.

A third group includes those virtually unknown in 2000 - such as blogs and software sites - and those that enable file-sharing.

'Most of today's internet success stories are survivors - older companies that are now profitable and have strong balance sheets,' said Scott Kessler, an equity analyst  at Standard & Poor's.

Google, for example, has about US$2.5 billion in cash, eBay has US$2 billion and Yahoo more than US$3 billion.

The change of mood in the online business world was signalled early last year  when media tycoon Rupert Murdoch gave a speech to newspaper editors in Washington.

'The threat of losing print advertising dollars to online media is very real,' he said. 'In fact, it's already happening, particularly in classifieds.'

Putting his money where his mouth is, Mr Murdoch last year assembled a US$1 billion war chest to buy web businesses.

In October, Dow Jones announced it had decided to turn the Asian and European editions of its Wall Street Journal into a tabloid format and offer subscribers free access to its online edition.

During this new tech boom, United States manufacturing has continued to bleed, losing three million jobs since 2001.

Relocations of US companies to Asian shores and cheap products from China are only two of the most obvious reasons for these wrenching changes, said David Heuther, chief economist  at the National Association of Manufacturers.

He cited the decline in global growth after 2001, a significant productivity acceleration and a decline in capital expenditures. Import penetration of cheap toys, textiles, PCs and other goods from Asia  cost only 500,000 of the three million jobs lost, he added.

But that share may be about to rise. Toyota is close to surpassing Ford as the No2 in the US passenger car market. And the huge US trade deficit with China is expected to grow further.

In 2004, only 5 per cent of all US car parts imports came from China, according to the Chicago Fed Letter. But with growth of 58 per cent a year since 1995, 'China has moved past Germany to become the fourth-largest source of car  parts imports for the US' by June last year.

This year, expect more howls from the US industrial heartland.



Dotcoms boom as factories fall silent