Although the number of job cuts at Internet companies fell to a 12-month low this month, the number of dot-com companies closing their doors more than doubled, sending mixed signals about the future of this struggling sector.
According to a report released this week by Chicago-based outplacement firm Challenger, Gray & Christmas Inc., Internet companies cut 4,899 jobs in August, down 44 percent from the 8,697 cuts in July.
Challenger, which tracks job cuts daily, said this was the lowest monthly figure since last August when Internet companies eliminated 4,193 jobs.
However, the news may not be all good.
"The decline in job cuts may not necessarily be an indication of an imminent turnaround," said CEO John Challenger in a statement. "It is more likely that dot-com firms are running out of employees to cut."
Challenger said that while the number of layoffs fell, 21 dot-com companies shut down in August, an increase of 133 percent from the nine closures recorded in July. So far this year, 248 dot-com companies have closed their virtual doors.
According to Challenger, 11 of the 21 firms that closed were Internet technology companies that build and maintain Web infrastructures such as servers, networking devices and telecommunications services and equipment. August job cuts in this sector were 1,117, or 23 percent of the total cuts. Portal companies had the most job cuts, losing 1,700 positions.
"Internet technology firms are likely to see some of the heaviest job cutting, since these firms provide the support system for all other Internet firms," Challenger said.
Since January, dot-coms have cut 87,795 jobs, more than twice the 41,515 cuts announced last year.