Report: Dot-Com Job Losses Swell in October

Internet job losses climbed more than 60 percent in October to 4,840 after five straight months of decline, according to a report released Wednesday by Challenger, Gray and Christmas (CGC).

The main culprits behind the spike in layoffs were online travel companies -- some of which moved to pare staff as demand plummeted following the September 11th terrorist attacks -- and a sharp weakening of demand for business-to-business (B2B) services and software.

"The impact of September 11 has rippled through the dot-com sector, as it has in almost all industries," said John Challenger, the chief executive officer of the Chicago, Illinois outplacement firm.

The increase in job cuts in October came after job losses fell to their lowest level in over a year in September, with 2,986 layoffs.

Dot-com job losses peaked in April at more than 17,000, but had declined for five consecutive months. So far this year, more than 95,000 jobs have been shed from Internet firms.

Travel Grounded

According to CGC, consumer service firms, which include Web travel sites, shed 2,055 jobs in October, more than 40 percent of the total. The professional services and B2B sector saw 1,001 layoffs in the month.

"Sites specializing in airline reservations and travel planning experienced a substantial falloff in business, which led to over 800 cuts," Challenger said.

On the other hand, CGC recorded only 15 layoffs during October in the online retail category.

Don't Pinch Me

While September 11th added an additional economic burden for many online companies, most of those that laid-off workers were already feeling the pinch of slowing economic times.

"As companies continue to cut back in online advertising, Web sites are reducing their business with vendors," Challenger said. "As the entire Internet sector continues to struggle, so do the companies that provide the technology and hard-wiring."

Big-Name Companies

October saw sharp job cuts from B2B software firms PurchasePro (Nasdaq: PPRO), which laid off about 150 workers and slashed management pay, and CommerceOne (Nasdaq: CMRC), which clocked in with 1,300 layoffs of its own.

In addition, Travelocity (Nasdaq: TVLY) cut about 10 percent of its workforce, and Homestore.com (Nasdaq: HOMS) slashed 700 jobs late last week as part of a company restructuring.

Challenger said areas of the economy that added jobs in October included security, defense, military, and law enforcement, all in direct response to the September 11th attacks.