Today Go2net reported a profit of .22 cents a share. Revenues soared to $23.0 million from $5.7 million the year before. Meanwhile, pro-forma net income more than tripled to $10.8 million -- or $0.22 a share (excluding acquisition and stock compensation charges).

What is the big deal? This is an Internet company that owns all Internet properties! Internet companies have rarely made money. Only dominant players and companies with major niches have been making money in the past. Companies such as Yahoo, Ebay, Priceline are some examples.

What does the company do or own? They own free webhosting companies Hypermart and Virtualave as well search engine metacrawler. They also own Authorize.net which is an online credit card processor and their biggest money maker.

Go2net should be congratulated on their success. Some other noticeable traits that other, Silicon Valley companies should look at is the fact that they are not in Silicon Valley! Neither is Authorize.net. Go2net is a Seattle company and Authorize.net is based out of Utah. And, that makes sense to me. Being in Silicon Valley doesn't.

First of all, for most companies, labor makes up the majority of the costs. Silicon Valley has some of the highest real estate prices, and labor rates in the country. This is not good for business. And, some seem to argue that in Silicon Valley, people work together and that is what makes the cost worthwhile. I find it hard to believe that competing companies could work together and also find it hard to believe that Silicon Valley workers are more productive than others outside of the valley enough to justify the added expense. I recently watched a television report that showed a very small home selling for $650,000 near Silicon Valley. This house sold for about $60,000 ten years earlier. That is absolutely ridiculous and I think many of the companies in Silicon Valley will go out of business.

Smart people and good talent are located throughout the US and throughout the world. Like any business, labor costs should be considered and I certainly don't expect companies based out of San Francisco, New York City, or Silicon Valley to have any advantage over the others when it comes to making a profit. They are at a disadvantage.

So, I encourage all competitors to flock to Silicon Valley, New York City or other super expensive place to run their businesses. Good luck in the gold rush competitors, you won't see me there!

Another thing to add is that transaction processing makes up most of their profits. Authorize.net made up approximately 40% of their profit. Most of the other sites are advertiser revenue based sites.

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