If we were rating wines instead of network companies, 2005 would go into the books as a fine vintage.

Collective revenue for the Network World 200, the largest North American public network companies ranked by revenue, was up 11% to $919 billion. Profits climbed 16% to $82 billion. For the first time, some 70% of the companies were profitable. That's higher than 2004, when 65% of the companies on the list were in the black. The norm, over the 12 years of the NW200, typically hovers in the 50% range.

The picture gets even brighter when you narrow the view to the industry's upper echelon, the 63 NW200 companies that have sales of $1 billion or more. These industry makers account for 96% of sales for the entire NW200, and more than half (36) saw sales climb an impressive 10% or more.

Some of that growth came through acquisition. The most stunning deals last year were SBC's $16 billion purchase of AT&T, Verizon's $8.5 billion acquisition of MCI and Sprint's $36 billion merger with Nextel, but consolidation wasn't limited to telecom.

All told, mergers and acquisitions slashed 29 companies from the NW200 ranks. Other prominent deals included Sun's acquisition of Storage Technology (which was No. 42 on the '04 list) and CA's purchase of Concord Communications (No. 154).

Others fell off the NW200 last year because they went private, including Enterasys Networks (No. 106), SunGard Data Systems (No. 35) and McLeodUSA (No. 74).

All this activity, coupled with the fact that IPOs are down dramatically, is altering the nature of the list. The companies up top are getting fatter while fewer newcomers are available to fill vacated slots. Whereas the smallest NW200 company last year had $32 million in sales, this year the No. 200 company reported a mere $20 million in 2005 revenue.

Slowly but surely, the industry is coalescing around a handful of strong players in four core markets: computing, network infrastructure, software and telecommunications.