Dot-Com Failures Pass 700

 
 
By eweek  |  Posted 2001-10-31
 
 
 

Yesterdays hockey sticks of growth have become broomsticks of doom this Halloween as the number of dot-coms in the dustbin surpassed 700 for the first time.

For Internet start-ups still whistling past the graveyard, October offered a ray of hope as the number of business failures fell to 33, the second lowest level since September 2000, when 22 bit the dust. But dont reach for the party hats just yet. The October toll was higher than the previous months and may indicate some year-end house cleaning is on the way.

"We have been predicting that a combination of tough economic conditions (exacerbated by the Sept. 11 tragedy) and year-end housecleaning by investors may lead to a modest short-term increase in the sectors pain in the final months of the year," according to the firm that tracks the data, Webmergers.com. "The modest increase in October shutdowns - and the significant increase in B2C shutdowns - may herald the beginning of that cleanup process."

Of the 33 sites that shut down in October, most were consumer-oriented, Webmergers.com reported. That total drove the number of shuttered or bankrupt sites to 716.

Other findings include:

  • The number of consumer-oriented shutdowns increased significantly in October from previous months, in part because of a spate of online radio and entertainment shutdowns.
  • Assets of troubled companies are beginning to move through the liquidation system; acquirers spent more than $2 billion to acquire assets of 162 Internet companies in the first nine months of this year.
  • California accounts for 30 percent of shuttered Internet companies.

Among the online radio and entertainment closures were NetRadio Corp., a Minnesota provider of online audio programming that ceased operations and online entertainment provider Volume.com that announced it would shutdown at the end of the month. Another shutdown, music information provider AudioBasket, Inc., has since announced that it intends to merge with digital content solutions provider eMotion, Inc.

Octobers numbers compare with 28 at the same point at the end of the month of September and with 38 in the final days of July. The number of shutdowns for September and August has since risen to 36 and 42 respectively as news of additional closures has, as usual, surfaced.

Octobers shutdowns bring the years total closures to 491 and the total since January 2000 to 716.

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