Dot-Com Layoffs Top 1,000 for Second Straight Month

Internet companies disclosed plans to cut 1,193 jobs in August, fewer than in July but enough to mark the second straight month in which dot-com layoffs exceeded 1,000, according to outplacement firm Challenger, Gray & Christmas.

"Is it a trend? It's too early to tell," CEO John A. Challenger told the E-Commerce Times. "There is certainly the potential for us to see more cuts for the rest of the year, as companies that survived the dot-com collapse are struggling to survive the overall downturn in the economy."

According to the Chicago-based firm, which began tracking dot-com layoffs in December 1999, July and August mark the first time since December 2001 and January 2002 that more than 1,000 job cuts occurred in back-to-back months in the Internet sector.

Busy Month

In part, the increased layoffs stem from a decision by Monster.com parent company TMP Worldwide (Nasdaq: TMPW) to raise its number of job cuts to 1,000 by year-end.

But IBM (NYSE: IBM) dropped the biggest layoff bombshell in August -- typically a quiet summer month -- by confirming in a regulatory filing that it has cut as many as 15,000 jobs worldwide, or about 5 percent of its workforce.

A Little Perspective

Still, August saw 76 percent fewer layoffs than the same month a year ago, when 4,899 jobs went on the chopping block.

Yearly totals follow a similar pattern. So far in 2002, just 10,550 jobs have been eliminated, compared with nearly 88,000 by the end of August last year. That period included the peak months of the dot-com shakeout, including April 2001, which saw more than 17,000 layoffs in a single month.

In fact, Challenger said that at current rates, 2002 should end with fewer than 16,000 Web layoffs.

"The volume of cuts through the first part of 2001 really eliminated the possibility of seeing too many more months like that," he noted. "What we're seeing now is there are still companies looking to find stability in a challenging market."

Sector Watch

As in recent months, many of the firms still slicing are those that provide software and technology to power the Web. In contrast, just 33 job cuts took place in the online media sector. Consumer services layoffs spiked, fueled by the Monster cuts, displacing the technology category, which has had the dubious distinction of leading the layoff parade for some time.

Technology firms announced 275 layoffs in August. But in the online retail category, which saw 128 layoffs in July, Challenger recorded no cuts planned in August.