• by Masha Geller , October 14, 2002

According to a new report from Webmergers.com, the failure rate of dot-coms has declined dramatically.

So far this year, Webmergers says, 93 Internet companies have shut down, which is about a quarter of the number (345) that shut down in the first half of last year. June marked the sixth straight month in which the number of shutdowns was below 20. By comparison, in the 16-month period preceding January of this year shutdowns averaged 44 a month.

At least 27 Internet companies shut down or declared bankruptcy in May and June as the rate of dot-com closures flattened, Webmergers says. June saw 13 casualties while May saw 14. Additionally, the 27 shutdowns in May and June compare with 125 failures in the same two-month period in 2001 - a fifth of last year's total. Also, a continued shakeout among providers of Internet access services added eight shutdowns in the two-month period. In total, at least 862 Internet companies have failed since January, 2000.

Although consumer-oriented properties dominate total shutdowns to date, they have declined as a percentage of the total as the purge extends to companies that sell software and services to business audiences or a general audience of both consumers and business (e.g. Internet access providers).

Shutdowns in the two-month period were concentrated among Internet content providers, infrastructure companies and ISPs and other providers of dial-up and broadband Internet access service. To date, e-commerce and content companies have dominated the casualties. Many of these companies were the business-to-consumer companies that comprised the Internet's first wave of shakeouts.

It will never cease to amaze me what some companies will research.