Dead Dot-Coms Pile Up in April

A drop in the number of dot-coms going out of business in March gave rise to hopes that the end of their economic plague was near. However, statistics for April show that the companies are still dropping like flies.

At least 55 Internet companies shut down in April. That's up from 44 in March, according to a report released Tuesday by Webmergers.com, a San Francisco-based research firm serving dot-com buyers and sellers. A record 58 dot-coms closed in February.

Despite the uptick, Webmergers President Tim Miller is optimistic that the figures soon will fall again. "In addition to taking tactical cost-cutting measures such as laying off employees and cutting marketing spending, many companies are making dramatic strategic changes in their business models," he said in a statement.

"We believe that such strategic 'morphs' will soon result in a rapid falloff in Internet shutdowns and the emergence of a new breed of leaner and more-focused Internet companies that will lead the sector to renewed growth and profitability."

Notable closures for April included delivery service Kozmo.com, sports news and statistics provider Quokka and Web consultancy MarchFirst, which recently decided to liquidate its assets after initially planning to reorganize under Chapter 11 bankruptcy protection.

At least 435 Internet firms have folded since January 2000. Half of the closures have come since the beginning of 2001.

Although e-commerce companies still account for roughly half of all shutdowns, recent closures are affecting an increasing number of consulting and Internet access providers and, for the first time, application service providers.

The study also revealed that merger-and-acquisition activity declined in April. Buyers spent nearly $2.6 billion for 115 companies in April. That's down from the $5 billion they spent to acquire 143 companies in March, Webmergers found.

Last month, Webmergers reported that there were 41 dot-com closures in March. It later raised that figure after additional shutdowns came to light.