6 Great Web Firms To Own

These half-dozen companies lie at the heart of Internet commerce.

For eight years, I've made my living from online journalism, so I spend almost all of my working day online.

Nevertheless, I'm still something of a Luddite in this field. For example, I'm not on either Twitter or Facebook and (wait for it) I don't even have a mobile phone, never mind an iPhone 4!

Luckily, I do have a friend (I'll call him Brian) who is a star performer at one of the world's very largest technology firms.

As well as technical expertise and decades of experience, Brian has every must-have electronic gadget and many more besides. Thus, for more than a year, he has been my sounding board for anything to do with the Internet, digital media, telecoms and technology.

Recently, I asked Brian to list his favourite web-based firms: the online businesses which, in his expert opinion, dominate the online world and will continue to do so for the foreseeable future. Within seconds, he gave me a list of six 'kings of the Internet'.

As you'd expect, these six are all American corporations. Listed in A-Z order they are:

1. Apple

Originally founded as a manufacturer of personal computers, Apple has grown and evolved into the world's biggest technology company, overtaking Bill Gates' Microsoft earlier this year.

Apple's domination of digital media comes from its production of best-selling devices, such as Macintosh computers, iPods, iPhones and iPads. In addition, its iTunes store is the number-one vendor of (legal) online music downloads, with a 70% market share. With the Beatles joining iTunes last week, almost all major musicians' output can be bought via iTunes.

Apple's genius comes from its total belief in elegant design and simple GUIs (graphical user interfaces), backed by strong integration of its hardware, software and online offerings.

Today, I still kick myself for not recognising Apple's brilliance by buying its shares. Indeed, I suggested to a Foolish friend that Apple shares were overpriced two years ago, when they were trading at around $100. How very wrong I was, as they have more than tripled since then. Oops.

2. Cisco

Brian describes Cisco as 'the backbone of the Internet', thanks to its dominance of the market for Internet-networking technology. At the height of the Dotcom boom in 2000, Cisco was valued at over $500 billion, making it the biggest company in the world. However, its shares deflated spectacularly as the TMT bubble burst, and they have climbed a mere 10% in the past five years.

What's more, Cisco (founded near San Francisco, hence the name) has had some recent problems, notably a profit warning on 11 November which saw its share price dive by almost a sixth. Nevertheless, with $40 billion of cash and cash flow of $9 billion a year (plus a maiden dividend), Cisco smells of value to me -- especially if it can continue its run of earnings-enhancing acquisitions.

3. Facebook

As I said earlier, I'm not a Facebook member, but the world's largest social-networking site has roughly 550 million users, with a further 10 million joining each month. To put this into context, world population is around 6.7 billion people, so one in 12 humans already belong to Facebook.

Hence, if I could own just one business, it would be Facebook. Likewise, if I could swap places with another individual, I'd like a shot at being 26-year-old Mark Zuckerberg. Zuckerberg, who co-founded Facebook in 2004 while at Harvard, still owns 24% of the iconic company.

At present, Facebook is a private company, so you can't buy shares in it. However, recent share sales by Facebook employees and investors place a value of nearly $34 billion on the firm. Who knows how much Facebook will be worth when it finally announces its initial public offering (IPO)?

By the way, although you can't buy Facebook common stock, you could invest in Mail.ru Group (LSE: MAIL). The Russian Internet firm, which had its London IPO on 5 November, owns 2.4% of Facebook, as well as being Russia's number-one email provider.

4. Google

What can I say that hasn't already been said about Google?

The giant of online search is the most-visited website in the world, ahead of Facebook at number two and Google-owned YouTube at number three. What's more, Google's non-English websites also dominate the upper reaches of the world's top 100 websites.

I use Google at least 200 times a day to search, read and shop, so it is the cornerstone of my Internet experience. Alas, my dumb move was not buying Google at its IPO in August 2004. I then compounded this error by not buying its shares when they briefly fell below $250 in November 2008, during the post-Lehmans meltdown. Dumb, dumb, dumb!

5. Intel

Although it is thirty years older than Google, Intel (from Integrated Electronics) is only two-thirds of the size of the Goliath of search. Nevertheless, as the world's largest semiconductor chip-maker, Intel sits at the top of another important technology mountain: PC hardware.

Alas, thanks to cut-throat competition in its market, especially from low-cost Far Eastern manufacturers, Intel's share price has fallen by a fifth over the past five years. Even so, its elliptical blue logo and sound logo are everywhere, making Intel a household name worldwide.

Despite the threat from network computers and cloud computing, I suspect that Intel's global presence will help it to profit from the next wave of technological change, either through internal change or acquisitions.

6. Netflix

I end with Netflix -- a company about which I knew very little until I researched this article, and the smallest of Brian's picks.

As well as renting DVDs and Blu-ray discs by mail, Netflix is one of the leading providers of (legal) on-demand video streaming in the US and Canada, with close to 17 million members. Indeed, the massive success of Netflix certainly contributed to the September bankruptcy of its high-street rival Blockbuster Video.

Thanks to its domination of the online movie-rental market, Netflix has attracted a number of fans on our US sister site, Fool.com, and has been repeatedly tipped by US Fool writers and users.

Now it's your turn

Finally, you'll note that I haven't included price-earnings ratios, dividend yields or other fundamentals for these firms. Those are for you to research. All I've done is point out six companies for you to begin your search for the next big winners from the Internet. Happy hunting!

More from Cliff D'Arcy:

• Lloyds Could Lose HBOS
• Seven Ways Investors Delude Themselves
• How Our Wealth Was Walloped

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