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Money: No stopping dot com

A YEAR ago few people had heard of QXL.com, 365 Corporation or eXchange Holdings, writes Jason Nisse. Sports Internet was virtually two men in an office. And Freeserve was little more than a twinkle in Sir Stanley Kalms' eyes. Yet these companies, all making a loss, are the star performers of the London stock market.

Dot com fever has gripped the City, forcing frantic in-vestors to buy shares in the companies that they hope will gain from the internet revolution. The biggest event of the dot com year was the flotation of Freeserve. This offers free internet access and makes its money partly through a cut of the telecommunications in-come and partly from a payment by any net retailer or information company that gets a click through Freeserve. When it floated the market was cynical: the share price was cut back to 150p amid predictions of a slump. It is now trading at nearly four times that level.

Hot on Freeserve's heels have been QXL.com, which carries out internet auctions, eXchange Holdings, which runs financial services websites, and 365 Corporation, which runs net communities of football supporters or music fanatics. Only 18 months ago these companies were valued at little more than pounds 10m each. Now QXL is worth over pounds 1.7bn, eXchange nearly pounds 750m and 365 more than pounds 400m.

But none of this has anything on the US, where the storming performance of internet leaders such as Yahoo! and Amazon has underwritten the boom on Wall Street.

However, US investors have already found a new "gold rush" - Linux, the operating system that threatens the dominance of Microsoft. Two weeks ago VA Linux Systems floated in New York and registered the biggest-ever rise in first-day trading - 698 per cent.