How Three Web Titans Survived the Bust

Amazon(AMZN Quote - Cramer on AMZN - Stock Picks) and Yahoo!(YHOO Quote - Cramer on YHOO - Stock Picks) both have to be considered survivors, in that their shares were each down more than 90% from their highs by late 2001 and have since recovered to declines of 50% and 65%, respectively. And their all-time returns are pretty similar, with each up roughly 2,400% from their initial-public-offering prices. Yet they took very different paths and remain on divergent tracks.

Anderson argues that Amazon founder Jeff Bezos turned out to be one of the best stock salesmen in finance history. In the late 1990s, he raised billions of dollars while he had the chance in stock and bond deals. He plowed the money into the sort of vast physical infrastructure -- distribution centers and inventory -- that eBay cleverly sidestepped. "Bezos understood there was only a certain amount of money available to companies like his, and that if he soaked up as much as possible, he would deprive potential competitors of funding," Anderson says.

Despite deep-seated frugality, Amazon nearly crashed before managing to squeak out its first cash-flow-positive quarter. Since then, it has survived by creating a first-class customer experience. Yet the company has a revolving door in management, has never managed to build a binding community and continues to face profitability challenges, as pricing pressure from online-retailing rivals intensifies.

Yahoo!, on the other hand, early on developed a laser-like focus on profitability and on developing the greatest variety of tools and content that people needed, wanted and actually used. The company's infrastructure is long on brains and silicon -- and far lighter on buildings and people. While eBay was the earliest profit king among the late-'90s-era tech stocks, with 87% gross margins and 24% net, Yahoo! has advanced since 2001 behind the strong leadership of Chief Executive Terry Semel to 73% gross margins and 23% net. (Amazon is at 26% gross and 5% net, while Symantec is at 87% gross and 22% net.) The keys to the Yahoo! model have been:

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