Dot-Com Job Losses Dip Below 1,000 in April

Internet-related companies fired 824 workers in April, marking just the second time in two years that the monthly job loss total has been below 1,000, according to outplacement firm Challenger, Gray & Christmas.

The number of job cuts fell 47 percent from March, when 1,549 cuts were announced, the Chicago-based firm found. It has been conducting the monthly survey since late 1999.

“There have been some promising signs lately that things might turn around for certain dot-coms,” CEO John A. Challenger said. “We are perhaps seeing a stabilization in this sector of the economy, but it may not last.”

April Showers

From April 2000, when the Nasdaq freefall began, until late 2001, job cuts in the Internet economy skyrocketed, peaking in April 2001 when 17,554 people were laid off in the sector.

To date, a total of 147,285 dot-com jobs have been slashed, according to Challenger’s running tally.

But the torrent of layoffs has begun to slow noticeably in recent months. Starting last April, the monthly totals began to decline steadily, spiking only in October 2001 as companies scrambled to address a falloff in business after the events of September 11th.

In February 2002, the first month since April 2000 in which fewer than 1,000 dot-com workers were fired, just 670 dot-com jobs were cut.

Mixed Message

Challenger said he sees both promise and potential frailty in the latest batch of numbers.

“Travel sites are doing exceptionally well considering the drop-off in travel and tourism since September 11th,” he noted.

But, he added, the scramble by many surviving dot-coms to update their business models in an effort to reach consistent profitability may cause a backlash.

“Some Web sites are considering charging fees for services which are currently being offered free,” he noted. “This may not sit well with regular visitors who have become accustomed to the free services. Just like any other business, if you lose the customers, the business is going to have a difficult time staying afloat.”

Software, Services Hit

The bulk of the April layoffs were in two sectors. Consumer services, such as financial services, saw 393 cuts, while 300 jobs were lost in the technology sector.

Software firm Commerce One was among those announcing job cuts during the month, while Ameritrade said layoffs are likely as it begins to integrate its US$1.3 billion acquisition of Datek Online.

Other sectors saw relatively few cuts. Online religion sites cut 41 workers, portals chopped 40 jobs, entertainment companies shed 30 workers and online media concerns laid off 20.

Challenger did not record any job cuts in the e-commerce sector in April, compared with 40 in March, 24 in February and 121 in January of this year.