The law of the corporate jungle says that sooner or later, a company that doesn't make any money will die.

Now I know many investors may not believe me when I say that. After all, just look at the big price gains many money-losing Internet stocks posted in recent years.

Yes, companies that don't make any money can stay in business and even see their stock prices do well for a period of time. At some point, however, Wall Street will demand profits. And when those companies don't deliver, their stock prices will whither and die, making their shareholders the poorer for it.

We're already seeing the problems that can occur when companies don't make money. Indeed, many of the previously high-flying, no-profit Internet companies have come tumbling to earth. Some are on their corporate deathbeds.

Why are profits so important to companies? There are lots of reasons, but the simplest explanation is that profitability is ultimately the lifeblood of companies. It is what allows companies to survive over time.

To be sure, companies can survive without profits in the short term because Wall Street allows them to survive. How? By providing funds in the form of debt and equity. That's how many of the money-losing Internet stocks have stayed in the game. Since they weren't generating any profits, they had to fund operations exclusively by taking on debt and/or floating stock.

Depending exclusively on Wall Street for financing, however, instead of funding growth internally via profits and cash flow, is a double-edged sword. When investors are giddy and willing to throw money at all things technology, these firms are OK. When investors' whims shift, however, perhaps because markets have turned dicey, big problems can develop in a hurry for companies with no profits.

Remember: The laws of economics and finance can be suspended, but they cannot be eliminated. Ultimately, companies need to be able to stand on their own in order to survive. That means they need to generate consistent profits.

Keep that in mind the next time you make an investment in a company long on promise but short on profits.