From: Rohit Khare (Rohit@KnowNow.com)
Date: Fri Dec 29 2000 - 13:25:53 PST
Dot-com job cuts surge as year winds down
By Melanie Austria Farmer
Staff Writer, CNET News.com
December 27, 2000, 8:40 a.m. PT
As stock prices for many Internet companies end the year at record
lows, the number of layoffs in the sector just gets higher and higher.
December was the seventh straight month in which dot-com job cuts
increased from the previous month, a new study found. And from the
first half of the year to the second, the number of cuts leaped
Job cuts for the period from Nov. 27 through Dec. 26 rose 19 percent
from November's record of 8,789 to the December tally of 10,459,
according to a study released Wednesday by international outplacement
firm Challenger Gray & Christmas.
One of the latest companies to be hit by job reductions is
business-to-business services start-up Collaborex, which cut about
one-third of its staff in mid-December, a company representative
confirmed. The Fairfax, Va.-based company, which launched in July,
eliminated roughly 43 jobs from a total of 131 employees and said the
layoffs are a result of overall market conditions and a slowdown in
spending by customers for its services.
Collaborex, which couples traditional business and consulting
services with hosted business-to-business software and technology
support, said it remains optimistic that integration services in the
world of exchanges and online marketplaces will continue to see
Meanwhile, Hispanic portal Quepasa.com, which recently laid off more
than two-thirds of its work force, said Wednesday it will have
further job reductions as it goes through the liquidation process. On
Wednesday, the struggling dot-com announced plans to sell all of its
assets, including its Web site business; its three subsidiaries,
RealEstateEspanol.com, Etrato.com and Credito.com; and all other
furniture and equipment.
Though the total number of layoffs announced this month was higher
than last month, the job cuts came at a slower pace, according to
Chicago-based Challenger Gray. November represented a 55 percent jump
from October, when 5,677 jobs were slashed by dot-coms.
Since Challenger Gray began tracking layoffs at dot-coms in December
1999, the firm said it has recorded roughly 41,515 job cuts from
about 496 companies. The new study showed that 91 companies, or 18
percent of dot-com companies tracked, have since gone out of business.
A sevenfold increase
From January through June, dot-com layoffs totaled 5,097, according
to the study. In comparison, between July and December, about 36,177
cuts were announced, representing a 600 percent increase over the
first half of the year.
Most of the job cuts have come from Net companies that specialize in
activities such as consulting and financial and information services.
Layoffs in this area totaled 19,535, or 47 percent of the aggregate
job cuts since December of last year, according to the study.
E-tailers marked the second-largest group to trim their work forces,
with 9,523 positions eliminated in total.
During the holiday month, a slew of Internet consulting companies
trimmed their work forces to cut operational costs and remain afloat
in a changing competitive market. Net consultants including Xpedior,
Scient, Lante, Viant, Agency.com and AnswerThink all announced
layoffs during the month of December, some just days apart.
Older Internet businesses including Priceline.com and HomeGrocer.com
also sounded off with their own work force cuts amid sour market
conditions. Priceline, the struggling "name your price" e-commerce
site, trimmed its work force by 11 percent and has said it will
postpone the introduction of new services.
"In the first six months (of 2000), all you heard about were job
fairs, lavish recruiting parties, and after-hours mixers where
would-be entrepreneurs hoped to meet free-spending venture
capitalists," Challenger Gray chief executive John Challenger said in
"Now, pink slip parties are the rage, where newly jobless dot-com
workers commiserate, exchange resumes and talk about the good ol'
days, which of course were only six months ago," he added.
Looking ahead, Challenger Gray noted in its study that with the
general wariness among investors about dot-com prospects, it is
unlikely that the industry will see a return to the high-flying era
when new dot-coms seemed to be sprouting every few days with
over-the-top initial public offerings.
Many former Net workers may avoid jobs with start-ups and venture
back to established companies, particularly brick-and-mortar types
that are slowly expanding on the Net, the study found.
This archive was generated by hypermail 2b29 : Fri Dec 29 2000 - 13:31:10 PST