Dot-com wipeouts twice as bad in 2001

By Michael Liedtke
Associated Press

SAN FRANCISCO — The dot-com death toll more than doubled this year, with at least 537 Internet companies either going out of business or seeking refuge in bankruptcy court, according to statistics released yesterday.

This year's casualties joined 225 dot-coms that perished during 2000, said Webmergers.com, a San Francisco-based deal maker that has tracked the rise and fall of the Internet economy.

But the worst may be over.

Only 21 Internet companies have failed in each of the past two months, the lowest mortality rate since 10 dot-coms failed in August 2000.

The recent drop-off has prompted some observers to conclude that most dot-coms have already been wiped out, but Webmergers said that perception is wrong.

The site estimates that 7,000 to 10,000 Internet companies remain in operation. That means the financial devastation of the past two years claimed no more than 10 percent of the sector, leaving behind a stronger — and possibly wiser — group of survivors.

"To say that the decline in shutdowns is because there are no dot-coms left is a bit like saying a decline in rabies rates is due to the fact that all the dogs are dead," Webmergers said in its analysis.

The dot-com wipeout generated a tidal wave of layoffs.

Through November, dot-com companies had announced 98,522 layoffs, more than doubling the 41,515 firings made in 2000, according to Challenger, Gray & Christmas Inc.