The NW200 Novell’s one-two punch Juniper: Secured & assured? Masters of the virtual world 10 start-ups to watch A building year: ’04 start-ups revisited Mergers & acquisitions

If 2003 was the year the Network World 200 bounced back after the upheaval at the turn of the century, then 2004 was the test to see if the recovery was real.

It was.

North America's largest public network companies stumbled in 2001, took a nose dive in 2002, began a comeback in 2003 and last year grew stronger: Collective revenue for the NW200 was up 9%, and the group generated a respectable $63 billion in profits.

What's more, some 65% of the companies ended the year in the black, a historic high in the 11 years of the NW200. On average, only about half the companies on the list muster that feat in any given year (and in the bleak days of 2001, only 31% of the companies eked out a profit).

Another sign that the industry is back: Mergers and acquisition activity heated up. Billion-dollar-plus deals included Juniper's acquisition of security vendor NetScreen Technologies for $4 billion; Symantec's acquisition of storage management company Veritas Software for $13.5 billion; the $35 billion Sprint/Nextel merger; and IBM's sale of its PC business to Lenovo in China for $1.25 billion.

Smaller but significant deals included EMC's $625 million acquisition of VMware (completed in '04); Computer Associates' $430 million acquisition of identity management vendor Netegrity; Gateway's $200 million purchase of eMachines; and Symantec's $370 million acquisition of anti-spam vendor Brightmail .

Cisco is the perennial acquisition bellwether and the company was up to its old tricks, spending $824 million last year to land 12 companies, up from only four acquisitions in 2003. But that needs to be put in perspective: Cisco bought 23 companies in the halcyon days of 2000 for a whopping $12 billion.

Some of the vendor jockeying last year stemmed from seemingly diametrically opposed IT goals: On the one side buyers are striving to simplify operations through automation, make better use of resources and extend access to those resources to other organizations. On the other they are contending with stringent new security, accountability and compliance rules.