January 2, 2002, 12:00 AM

The worst is over in dot-com shutdowns, Webmergers reports

In December, 21 Internet-based companies shut down, the lowest number since August 2000 and only half the number from the year earlier December, says Webmergers Inc.

Kurt Peters

Executive Editor

The number of dot-com companies shutting down has dwindled to a mere trickle, compared to earlier floods, reports Webmergers.com, which tracks mergers, acquisitions and closures.

In December, 21 Internet-based companies shut down, the lowest number since August 2000 and only half the number from the year earlier December.

Last year, at least 537 Internet companies shut down or declared bankruptcy, more than twice as many as in the previous year, when 225 dot-coms failed, Webmergers reported. December`s 21 shutdowns bring the total death toll to 762 since January 2000. Last year also experienced a relative decline in consumer shutdowns as the shakeout began to spread to business infrastructure companies, Webmergers says.

“The worst is clearly over for Internet closures,” says Webmergers, which reports that shutdowns peaked between October 2000 and June 2001, a period that accounted for nearly 75% of all shutdowns in the past two years.

“It may appear on the surface that the decline in dot-com shutdowns is simply a result of the fact that are no dot-coms left to shut down,” Webmergers says. “That is not the case, however. We conservatively estimate, based on several data sources, that between 7,000 and 10,000 Internet companies have received some sort of ‘formal’ funding, which suggests that at most, 10% of significant Internet companies have shut down or declared bankruptcy. It may be safer to say that the Darwinian process has left many fewer weak Internet companies. But to say that the decline in shutdowns is because there are no dot-coms left is a bit like saying a decline in rabies rates is due to the fact that all the dogs are dead.”

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