Last year's radical reshuffling at Morningstar might have provoked enough gossip-traffic to overwhelm even Janus's PR department: from furtive rumors to web postings of internal memos, the reorganization's high profile was amplified by its 100% mindshare.

In the meantime, as industry insiders idled around the water cooler, bean counters worked overtime to implement Joe Mansueto's emphatic cost-management practices, bringing the Chicago-based company from a $1 million per week burn rate to a cashflow neutral position with a solidly profitable outlook for 2001.

How was this done? By giving management the right metrics to see incurred costs and relying heavily on a profitable core business to offset R&D overhead. In a move modeled after Microsoft, Morningstar management exposed the invisible expenses by subdividing the company into seven separate business units.

In spite of the successful cost-cutting measures, doubt still overshadows Morningstar's strategy, especially the question of what's left in their online play. The interesting results will come after the spring launch of the online version of Principia, which generated 30% of Morningstar's revenue in 2000, and is expected to bring more advisors to their beleagured advisor site.

"They've been reporting losses in their online business for several years," said Lee Kowarski, a consultant at New York-based kasina. "How they'll gather revenue from [a more popular] morningstaradvisor.com is difficult to determine."

Of course, this position is far from unique for most Internet companies.

"The Internet revolution had been a curveball," explained Don Phillips, managing director and former chief executive officer. "If we hadn't played the internet business at all, if we had stayed with print, we would have been increasingly marginalized. What would have been the wiser thing?" 

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