Report: Dot-Com Layoffs Rise in July

Dot-com layoffs awakened from a midsummer slumber, more than doubling in July to 1,750 lost jobs, according to a Challenger, Gray and Christmas report.

That makes July the third-worst month so far this year for Internet-related layoffs, behind May, which had 2,078 cuts, and January, when 1,802 were fired. Layoffs dipped to as low as 670 in March.

The up-and-down nature of recent layoffs makes July the third month this year that has seen an increase in layoffs after a month of declines, which sets it apart from the rest of the economy, according to the Chicago, Illinois outplacement firm.

"We're not seeing that in other areas," CEO John A. Challenger told the E-Commerce Times. "It's a sign of just how volatile this sector still is, even after all the shaking out that took place."

Overall Improvement

In fact, overall job cuts fell in July to just under 81,000, their lowest level in 14 months, Challenger found in a separate survey.

The slowdown stems largely from fewer cuts in the telecom sector, which had been hammered in May and June as WorldCom revelations rocked that sector of the economy.

Up and Down

The 1,750 layoffs in July amounted to a 156 percent increase over June, when 684 workers were given their walking papers. In comparison, it was more than 80 percent below July 2001 levels, when 8,697 jobs were shed by the industry.

Since January, 9,357 people have lost Web-related jobs, compared with more than 80,000 during the first seven months of last year.

"The sheer volume of cuts through most of 2001 seemed to leave little left to shake out," Challenger said. "At one point, it looked like there would be stabilization."

But the fact that jobs are still being cut in sizeable numbers -- given how much the sector has shrunk since late 2000 -- is an indication that even strong firms are struggling to stay profitable and remain afloat, he added.

Services, Technology Hit

Online consumer services, such as banks and trading companies, announced 770 layoffs in July, followed by technology firms with 498 layoffs and media-related sites with 255.

It was the eleventh time in 14 months that technology ranked either first or second in job losses.

Online retail saw a spike in job cuts as well, with 128 recorded layoffs. By comparison, Challenger did not record any online retail job losses in June and found 73 layoffs in the sector in May.

Planned Cuts

Among the companies announcing layoffs or saying they planned to trim workers in coming months during July was customer service software maker Siebel, which held open the possibility that it could cut up to 16 percent of its employees worldwide over the next year, if revenue continues to slump. That would leave the company with 6,000 jobs.

Web search company Inktomi (Nasdaq: INKT) said it would cut 270 workers in a cost-cutting bid.

Since late 1999, Challenger has tracked 151,797 job cuts, more than half coming during early 2001.