Dot-com shutdown pace slows, signaling shakeout is ebbing

The Associated Press
Monday July 08, 2002

NEW YORK – In a sign that the Internet sector may be nearing the end of its brutal shakeout, the number of shutdowns and bankruptcies by dot-com companies in the first half of this year fell 73 percent from the same period last year, a new report from Webmergers.com shows. 

At least 93 Internet companies closed their doors or filed for bankruptcy protection in the first six months of 2002, down from 345 such casualties during the same period last year, according to the San Francisco research firm that has been keeping a tally of shutdowns. 

June, which had 13 shutdowns, marked the sixth consecutive month in which the number of shutdowns came in at less than 20. That’s a considerable contrast from the 16-month period preceding January, when casualties averaged 44 a month. 

Since January 2000, when the Internet froth was at its peak, at least 862 dot-com companies have failed, according to Webmergers.com data. 

E-commerce and content companies — many of which were business-to-consumer concerns that were quick fatalities during the first wave of the Internet shakeout — dominate the Internet company failures to-date. 

Of the 862 shutdowns, 368, or 43 percent, are e-commerce companies, while content companies have a tally of 217, or 25 percent. Infrastructure, Internet access and professional-services companies account for 16 percent, 10 percent and 6 percent of shutdowns, respectively. 

Over the past two months, shutdowns were dominated by Internet-content providers, infrastructure companies, Internet-services providers, and other providers of dial-up and broadband Internet-access service.