Blaze of Dot-com Layoffs Likely to Increase, Study Says

Another day, another round of dot-com layoffs. And, according to a study by outplacement firm Challenger Gray & Christmas, the sharp increase in job cuts is likely to increase in coming months.

In a study released Monday, Challenger Gray said the total number of job cuts since December 1999 was 22,267. From September 25 through October 20, dot-com layoffs climbed to 5,677, a record for a single month and the fifth consecutive month that the layoff total has increased.

The firm, which tracks job cuts in all sectors, also found that 16 percent of 274 companies doing business on the Internet have gone out of business since last December.

“Services, such as consulting, financial, and information, suffered the most cuts since December, accounting for 36 percent or 8,113. Retail was second with 5,450 cuts. Health and fitness jumped from fifth in September to third in October with 2,190,” the study said.

Challenger Gray said as of October, teen-related sites had surfaced among the dot-coms with significant layoffs, totaling 328 cuts (6 percent of the monthly total).

And, with the predicted slowdown in online spending for the all-important Christmas season, Challenger Gray is expecting more sites to shutter operations.

John Challenger, CEO of the Chicago-based outplacement firm, said poor financial performance during the Christmas season could cause more uncertainty in the Web marketplace. “Heading every dot-com CEO’s priority list is the need to generate enough paying customers to hit critical mass…Many of these new companies will fail and disappear. Some will be acquired by traditional companies hoping to integrate an e-commerce presence quickly into their current operations,” he said.

“Others will be purchased by leading companies hoping to build enough revenue to get over the hump,” he added.

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