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Investors give Netcom thumbs-up

The Internet service provider lays out its business plan at an annual shareholders' meeting.

SAN JOSE, California--Netcom (NETC) assuaged the doubts of investors today by laying out a strategy for profitability that focuses on an "untapped" market.

"There is a lot of confusion about what is a consumer market and what is a business market and how to make a profit in this sector," company chief financial officer Clifton Weatherford said at the annual shareholders meeting here. "We are focused on the right market...We are going to focus on that middle tier."

The company's stock closed today at 15-1/16 down from 15-15/64 yesterday, a slight dip after a month of strong growth. Netcom's stock has soared 50 percent since May and climbed another 7 percent yesterday based on expectations that the company would announce a faster profitability timeline today.

The company didn't actually do that. Rebecca Wallo, director of investor relations, said it is highly unusual for a company to make new announcements at its annual meeting. Instead, it reviewed past financials and explained the business plan.

Nevertheless, investors were generally happy with Netcom's message. Two attendees described themselves as "two very happy investors."

Paul Collins, assistant vice president of shareholder services at Chase Mellon, represented more than 10 million Netcom shareholders at today's meeting. He said that a strong turnout of mail-in votes indicates that shareholders are satisfied with the company's direction.

Weatherford said that, while Netcom will continue to expand its services to its business customers, it will not leave the individual accounts in the dust. But he also added that investors should monitor the company's revenues instead of worrying about slowing subscriber growth.

Weatherford pointed out that the amount of revenue that each customer generates is skyrocketing. "I don't care about growth in subscribers. We are growing revenue not subscribers...Quarter over quarter, revenue continues to be record numbers," he said.

The company is now targeting customers who are willing to pay a higher price for more elaborate services. Weatherford explained that one customer with a dedicated line now generates about $1,200 a month, an amount equal to hundreds of consumer subscribers paying $24.95 each month for unlimited access.