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One Year Ago: Report: Dot-Com Layoffs Hit Record High in January

By Elizabeth Blakey
Feb 7, 2002 4:25 PM PT


Originally published on January 31, 2001 and brought to you today as a time capsule.

One Year Ago: Report: Dot-Com Layoffs Hit Record High in January

E-commerce and tech layoffs continue to mount, hitting a record number of 44,851 for the month of January, according to a report released by Challenger, Gray & Christmas.

The executive placement firm, which tracks daily job cuts in various sectors, found that layoffs in the combined e-commerce, computer and telecommunications sectors accounted for nearly a third of the 142,208 jobs lost in January.

E-commerce alone saw 11,887 layoffs in the month.

The January totals surpassed the previous record number of layoffs -- 133,713 in December -- by more than 6 percent, the firm said.

Winter Blues

December and January combined for 275,921 job cuts, the largest two-month total since Challenger began its monthly reporting in 1993.

"To put the last two months of job-cutting in perspective, consider that 1998 holds the decade record for the most job cuts in one year with 677,795," Challenger chief executive officer John A. Challenger said. "In just two months, job cuts are already at 41 percent of that total."

The firm collects its data based on corporate announcements, meaning that the layoff numbers would likely be higher if layoffs at smaller firms were included as well.

Valentine Massacre?

February is not starting off with any apparent reduction in pink slips. Online retailer eToys (Nasdaq: ETYS) said it will lay off its remaining 293 employees and wind down operations by the beginning of April, and infrastructure company InfoSpace.com said it has laid off 250 of its 1,200 employees, as part of a plan to cut costs.

Additionally, Internet consulting firm Razorfish announced it was reducing 400 jobs worldwide, while Bertelsmann AG announced that it was eliminating 55 jobs at newly acquired subsidiary CDNow, in a move that will eliminate the entire advertising sales function at the online music site.

Consolidation also led to dot-com layoffs at CarsDirect.com in February. When the online auto site announced last week that it had purchased rival site Greenlight.com, an online car site backed by Amazon.com, the news included a reported 75 job cuts as part of the merger.

Confidence Game

The recent layoffs of 1,300 people at e-tail giant Amazon.com came in under the wire on January 31th, contributing to the record high for that month.

"Job security has suffered a severe shock, plunging seemingly out of the blue from a let-the-good-times-roll economy to 275,000 announced job cuts in 60 days," Challenger said. "Can there be any doubt that consumer confidence collapsed with each major job-cut announcement, particularly the sudden large cuts made by big name employers?"

In one respect, the answer is no. Despite the deaths of dozens of dot-coms and the stock market plunge that left many e-tailers gasping for air, U.S. consumers continue to shop online because they like the convenience and control it offers, according to a report issued in January by Forrester Research.

"Rumors surrounding the demise of e-commerce have been greatly exaggerated -- in fact, they are dead wrong," said Christopher M. Kelley, analyst at Forrester Research. "While the number of tech-related pink slips increases, consumers continue to flock to the Net without regard for the pain faced by online retailers."


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