Worst may be over for dot.coms
 
CHICAGO, Dec 31, 2001 (United Press International via COMTEX) -- Is the dot-com
shakeout over?
 
Outplacement specialist Challenger, Gray & Christmas says more than 100,000
people lost jobs at Internet-related businesses in 2001 as at least 537 dot-coms
pulled the plug, shutting down or declaring bankruptcy.
 
Dot-coms announced 2,403 job cuts in Dec. 17 percent fewer than the 2,901 cuts
in November, Challenger said in a report issued Monday.
 
The Chicago-based recruitment firm has tracked job-loss announcements on a daily
basis for nearly a decade.
 
"For now, things appear to be somewhat more stable for the dot-coms that
survived the major shakeout that lasted about nine months, from November of last
year through July 2001," said John A. Challenger, the firm's chief executive
officer. "But this is still a relatively young industry that is going through
growing pains and is, therefore, very volatile."
 
Webmergers.com, an e-business tracking Web site, said the Internet bubble burst
last March as venture capital abandoned dot.com issues and investors dumped
Internet stocks. Just five e-business companies shutdown in the first quarter of
the year, but 135 ceased operations in the fourth quarter.
 
Twenty-one dot-coms shutdown in December, raising the total number closing in
2001 to at least 537, compared to 225 in 2000. At least 752 Internet companies
have closed in an industry-wide shakeout over the last two years, but December's
toll was the lowest since August 2000.
 
Challenger said 100,925 dot.com jobs disappeared in 2001, almost 2 1/2 times the
41,515 cuts announced the previous year.
 
"Despite the carnage this year, the worst is clearly over for Internet
closures," Webmergers said. "Internet shutdowns and bankruptcies have declined
substantially in recent months."
 
While some may think the decrease in closures is because there no dot-coms left
to fail, Webmergers says that is simply not the case.
 
A report estimates between 7,000 and 10,000 Internet companies remain in
business and that no more than 10 percent have shut down or filed for
bankruptcy.
 
"It may be safer to day that the Darwinian process has left many weak Internet
companies," Webmergers said. "But to say that the decline in shutdowns is
because there are no dot-coms left is a bit like saying a decline is rabies
rates is due to the fact that all the dogs are dead."
 
Challenger agreed the shakeout wouldn't kill the Internet. Companies that
provide the technology that makes the Internet work were hit hardest by job
cuts, with telecommunications and other technology firms cutting 36,519 jobs in
2001, 67 percent more than the 21,860 cuts in consumer services, the second most
battered sector.
 
More than 400 media sites went out of business, but travel sites and on-line
retailers saw gains. Internet shopping sales rose more than 30 percent in 2001
and Yahoo reported holiday sales on its e-commerce site jumped 86 percent over
last year.
 
Internet service provider American Online Inc., a division on AOL Time Warner,
and the world's largest online service, signed up its 33rd million customer this
month.
 
"The Internet is still burgeoning and there is a lot of uncharted territory that
will create new business opportunities and the job growth that naturally
follows," Challenger said. "Of course, the key, as in any type of business is
developing a plan that ultimately makes money."
 
 
By AL SWANSON
 
 Copyright 2001 by United Press International.
 
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