Just a month ago, carOrder.com recruiters put help wanted fliers on the windshields of cars, trying to lure high-tech workers to the online car-buying site. Now it plans to lay off 100 employees to cut costs.
Although Internet companies have been known for giving employees lucrative stock options and creating overnight millionaires, several dot coms have been slipping workers pink slips lately and sending them to the unemployment line.
"It's the vanguard of what we are going to see occur in many places throughout the economy as companies get hit by the cash crunch," said John Challenger, chief executive of Challenger, Gray & Christmas, an international outplacement company.
More and more investors are insisting on concrete earnings from Internet companies in the near term, which will lead to a wave of mergers and layoffs that will continue throughout the year, Challenger said. "It's a signal that we are moving into the next phase of the digital revolution."
The days of endless money pouring into companies with weak business plans, little or no revenue, few customers and no profits are gone. The marketplace is going to sort out the weak from the strong and more dot com workers will lose their jobs.
In the past few weeks, job cuts have occurred at start-up companies such as KBkids.com, which announced the elimination of one-third of its staff, and Quepasa.com, a portal aimed at Spanish speakers that will let go a third of its 90 employees during the next 60 days to control costs.
PetPlace.com and Total Sports are also trimming their work forces.
PetPlace, a privately held information site for veterinarians, laid off 19 of its 27 employees in Seattle last month. The company now has 28 employees, primarily in New York. "We're not shutting down the company and we're not shutting down our Seattle operations," said Scott Messinger, executive vice president of marketing at PetPlace.
Last week, Total Sports, an online media company in Raleigh, said it will withdraw its initial public offering (IPO) and axe 20 percent of its workers.
"The company does not believe that it is in its best interests to sell shares publicly under the current market conditions," said Frank A. Daniels III, Total Sports' CEO.
AltaVista, the Internet search engine in which CMGI is the major stake holder, announced plans to eliminate 6 percent of its work force and said it will postpone its IPO until the fall.
All is not gloom and doom for Internet workers, however. Internet experience is valuable in today's economy, since every company is trying to build its e-business.
"The people may not have hit the lottery at one company, but they have the skills they need to find a good job," Challenger said.
