Increasingly, investors are taking a second look at the dot coms to evaluate their value as an investment. Based on their business plans and financial health, can they ever expect a positive cash flow?
The Alfred E. Neuman quote, “Who me?” just isn’t cutting it anymore when companies are being asked when they will turn a profit. Even the venture capitalists have put away their Santa suits.
At some Internet start-ups, the pink slips have been flying as companies reduce their greatest capital expenditures—which means cutting salaries. Consider a couple of the recent dot-com casualties:
- Early in June, APBnews.com fired all of its 140 employees after it couldn’t come up with a third round of VC funding.
- Salon.com dropped 13 employees at about the same time and shut its Seattle office as it tried to cut its operating expenses.
This is what happens when the NASDAQ goes from bull to bear. Initial public offerings get postponed and money suddenly dries up.
Pink slips aren’t reserved for people at the little companies either. At the end of May, Sony let go 50 employees at its Sony Online Entertainment offices in Los Angeles after promising to do the same to 60 employees in New York.
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