Dot-com job cuts more than doubled in March compared with February, according to a new report from Challenger, Gray & Christmas.
A total of 1,549 job cuts were announced in March, up 231 percent from the 670 tallied in February. Still, the damage was far less severe than a year ago, when more than 9,500 cuts were made in March.
The abrupt jump in Internet-related layoffs put an end to a four-month run of declining cuts.
The March layoffs bring the total for 2002 to 4,021 job cuts, just a fraction of the 34,010 layoffs announced in the first quarter of 2001. Since Chicago-based Challenger, Gray & Christmas began tracking Internet layoffs in December 1999, 146,461 jobs have been eliminated.
CEO John A. Challenger said the cuts may indicate a shift. While previous dot-com layoffs were dominated by pure-play Web companies that faltered or grew too fast, the new wave appears to be made up of cuts by old economy companies that made major investments in Internet operations.
“We will probably see more and more job cuts being announced by companies with old economy roots which quickly expanded onto the Internet,” Challenger said, citing banks, traditional retailers and media outlets as examples.
Tallying It Up
The financial services sector recorded the most layoffs in March, with 666. Consumer services companies sacked 520 people in March. Portals accounted for 200 job cuts; technology, such as software, for 140; retail firms for 40; and entertainment sites for nine.
Among the top Internet sites to cut jobs in March were electronics e-tailer 800.com, which folded early in the month and laid off its remaining workers.
In addition, online credit card company NextCard collapsed in March, abruptly laying off a reported 500 workers just days after its banking division was shuttered by regulators.
Old Economy Spillover
Traditional media firms also cut jobs in March. For instance, Martha Stewart Omnimedia reduced its Web site workforce by 40 people.
Challenger said traditional companies have been able to withstand the online market shakeout longer, but they may have moved online too quickly or with too much of an investment.
“These companies were the last to get on the bandwagon and will be the last to get off, mainly because they have a stronger financial base from their primary, non-Internet business,” Challenger said.
“But even with this added safety net, they will only continue their Web offerings if there is viable proof that it will help the company make more money.”