Is it the beginning of an exodus?

NEW YORK: Job cuts in the Internet sector continued to grow in October and

outplacement firm Challenger, Gray & Christmas said the pace of layoffs

would increase as the year came to an end.

In October, 5,677 jobs were cut in the dotcom sector, up 18 per cent from the

4,805 in September, according to a report by the outplacement firm.

"We have hit a period here, especially in the business-to-consumer area,

where many of those companies are going to face tough decisions," said the

outplacement firm’s chief executive John Challenger in a phone interview.

"It's going to be contingent upon whether they bring in enough revenues

during the holiday season."

Challenger added that some companies would survive as consumers found it

easier to identify the long-lasting brands.

The Internet sector has had a difficult time in recent months as investors

battered the shares of companies unable to promise near-term profitability.

Even industry leaders such as Amazon.com Inc., Yahoo Inc. and America Online

Inc. have seen their stocks sag to 52-week lows as investors reevaluate

valuations.

Earlier this month Stamps.com Inc. cut its work force by 40 per cent, or 240

jobs. Tribune Co. cut 80 jobs in its Internet unit and Red Herring

Communications let about 25 people go this month. Internet health company WebMD

Corp. said in late September it would cut 1,100 jobs.

Since December, 22,267 job cuts have been announced and about 16 per cent of

the 274 dotcom companies Challenger looks at have failed since December.

Services, such as consulting, financial services and information suffered the

most cuts since December, accounting for 36 per cent, or 8,113 job cuts. Retail

was second with 5,450 cuts. Teen and related sites surfaced in October with 328

cuts, or 6 per cent of the monthly total, the report found.

Dotcom employees are becoming increasingly restless and holding on to

talented employees at levels other than the very top is becoming almost

impossible. Attracting "old economy" business-building experts is

getting tougher and tougher, the report said.

Several executives at Internet companies have also left in recent months.

For example, NBC Internet Inc. president and chief operating officer Edmond

Sanctis resigned Friday, and WebMD co-chief executive officer Jeffrey Arnold

resigned earlier this month. Internet search company AltaVista's chief executive

Rod Schrock also stepped down earlier this month.

"A lot of the dotcoms are facing heavy pressure from investors to move

the founders and even the original team out as they bring on people who can

build the businesses," Challenger said.

He added that the companies sometimes needed different skills than the

original team possessed.

(C) Reuters Limited 2000.