Was it only a year ago that the founder of Amazon.com was beaming from the front of that magazine, an icon of the New Economy that had taken the world by storm? The choice of Bezos as a cover boy made complete sense at the time. He and other Young Turks on the Web had overturned the old order, sparked an electronic revolution and become impossibly rich.

Impossible, it turns out, was the operative word. Since then, the euphoria (and market capitalisation) of the industry has been cut to shreds and some of its most prominent companies are in extreme distress. Few could have imagined that many of the brightest lights of Silicon Valley would lose most of their luster so suddenly.

At a recent spate of local holiday parties (which have been fewer and farther between this year), the chatter was decidedly muted and the spreads more frugal compared with last year. Still, most insisted things couldn't get worse. Or could they? That's the big question that is now hanging over the high-tech sector as we enter the new year. Here are some educated guesses as to what will happen:
It will get worse before it gets betterThe values of most Internet companies have dropped considerably since spring. Expect even more air to be let out of the tech bubble. Fueling this further decline in stocks will be a weakening ad sector that will hurt content, media and search sites; the traditional annual fall-off in the sales of tech devices that will squeeze big computer and software businesses; and the expectation that many more Web companies will go out of business after the holidays, a scary time for retailers in general.

Some Web companies have tried to stay afloat by slashing jobs and costs. They can forget about getting any more investments for months. Even when the spigots do open again - and they will - the money will only trickle in, and go only to the most desirable concerns.

Head: Dotcom bubble has burst; will things worsen in 2001?
The most-watched company: Amazon.com, which despite a big cash cushion has billions in debt to contend with, prompting worries over whether it will ever reach profitability.

Wall Street analysts will downgrade Yahoo!'s enthusiastic exclamation point to a semicolon
Even the most loved firms won't get the benefit of the doubt, sending shares even lower. Look at the recent sell-off of shares of the dominant Web portal, which was much ballyhooed until just recently.

Other "blue-chip" Web companies, such as eBay, have also suffered as supporters loudly question their ability to ever justify their insane valuations. Given that price/earnings ratios of their stocks are still stratospheric for Yahoo and an eye-popping for eBay), there seems to be plenty of room for the price of the shares to drop.

Pundits repeat the new mantra of profits as being the salvation of Internet companies, but simply displaying the ability to make money will not be enough to remain a major player in the years ahead. What will be required will be an ability to show sustained and exponential profits from a variety of sources, meaning that one-note companies will be shunned.

Most watched company here: Yahoo, which needs to prove it can goose alternative revenue streams and attract regular-paying customers.

Expect a flood of June brides
They're being kicked while they're down, but the fact is that many Web companies still have a promising future, especially when coupled with complementary companies. Untested start-ups as well as major Web companies were able to attract tens of millions of customers in an impressively short amount of time.

Many traditional media and communications companies should hang their heads in shame. Then they should see a second chance as the prices of top-notch Web companies head for the bargain basement. Having strong online divisions will be a must in the years ahead.

Most watched company here: All of them. At least one major Web firm - Yahoo, Amazon or eBay - will merge or be bought in the next year.

VC will stand for venture communistsOne group that has seemed to escape the recent Web shakeout is the venture capitalists. They were the main reason the Internet was partying like it was 1999. In 2001, a lot of new companies will be starting an Odyssey just to stay in business. They have declining (or negative) returns and increasing difficulty raising additional money from investors.

Don't feel too sorry for them. Most venture capitalists invested for pennies per share, and they sold off their stakes more quickly than most, giving them plenty of wiggle room. They also are often the first to pull the trigger on companies, even promising ones.

Most watched company here: Benchmark Capital, which rode to fame on its stellar returns from eBay, which gave it a hot reputation that they must prove won't grow cold in hard times.

Uncle Sam will be watching
While the federal government has played a largely hands-off role in the nascent Web industry, 2001 will see increasing intervention and regulation. Until now, much of the control of the development of the commercial Internet has been in the hands of its companies, which have pushed for self-regulation and gotten a lot of latitude. But many of the major issues regarding the Web have gotten too big to ignore, including raging debates that have begun over intellectual-property laws and privacy protection. Add to that Internet taxation, security concerns, worries over too much concentration of power regarding content and distribution, and it's a near certainty that regulators will become deeply involved as never before.

Most watched issue here: While Napster gets all the headlines, it's online privacy that is likely to take center stage by the fall when major bills are considered by Congress. Given the need to find solid bipartisan issues (and get voters on their side for the 2002 election), it'll be easy for legislators to rush to the defense of consumers.

It's not over until it's over
It may be fashionable to insult all things Internet these days, but it's a losing stance. The money that has been doled out to create the modern Internet, in the end, will be considered well spent, much as were the investments made in highways, telegraph and telephone lines, and in electricity.

By the end of next year, the pendulum that has moved away from the Web will swing right back toward it, as the many uses of the Internet reach further into our daily lives and investors warm to the strongest survivors. Expect huge strides in the handheld and wireless sectors, as more and more features are added to allow constant connectivity to the Web and easier access to information.

Most watched trend here: The roll-out of wireless technology, including Bluetooth and home networking devices, which eliminate the need for wires.Wall Street analysts will downgrade the name of this column to Gloom Town.At least until the next boom.The Wall Street Journal