Earlier this week e-business giant Amazon.com announced it would close two operation centers and lay off 15 percent of its employees, a sign of the drastic turnaround within the last year for dot-com companies.
Internet business at one time was characterized by limitless potential and ever increasing stock value. However, rapid expansion and little profit have technology stocks plummeting and investors worried.
“Investors exhibited irrational exuberance in their expectations for the performance of e-business. They had fantasy-like expectations of what firms would be able to accomplish with the internet,” said Public Policy Prof. Kathryn Dominguez.
The online toy business eToys suffered after failing to meet the Christmas season rush. “The idea and software behind eToys was good, but they went bankrupt when shipping problems forced them to miss Christmas deadlines. E-businesses can have a solid plan, but still fail due to infrastructure problems,” Dominguez said.
Students who once took comfort in the booming economy especially the rapid growth of employment opportunities with e-businesses have starting looking toward other fields.
“I used to not worry about getting a job, being an English major I thought internet companies would always need good writers but now with the instability of e-business, the job market doesn”t look as good,” said Tori Turner, an LSA senior.
Some students have ignored employment opportunities with internet companies because of their current financial instability.
“I wouldn”t want to work for e-businesses because they would pay me in stock options, and stock options don”t pay for dinner,” said Marvin Benninghoff, an LSA senior.
Despite the now lethargic growth of most e-business, some internet based companies continue to prosper and expand.
Yahoo!, which produces no original material but simply distributes information and advertising, still is showing revenues of more than $1 billion a year.
Additionally, the popular Internet auction site eBay nearly doubled its revenue last year despite the sudden drop in the NASDAQ.
“E-business companies were somewhat of a fad, and now the good ideas are succeeding while the bad ideas are failing,” Dominguez said.
While some e-businesses are down from their peak value by as much as 98 percent, many economists feel there is still a great deal of growth potential for internet based companies.
E-businesses cut down on cost by allowing software, customers and other businesses such as shipping companies to share the work. The Internet”s growth potential is considerable when international expansion is considered. Amazon already has business centers in Britain, Germany, France and Japan.
In response to the failure of other internet companies, dot-com liquidators such as Smartbargains.com and Overstock.com have sprung up.
These liquidators buy products at discounted rates that didn”t sell from other companies, and then resell them at near wholesale.
So far, the sagging dot-com economy has had little impact on University of Michigan students seeking jobs.
Lynne Sebille-White, assistant director of recruitment services for Career Planning and Placement, said, “The number of e-businesses recruiting this year are about the same, but some have changed names after merging with other companies.”
The online world suffered a blow in the last year but growth opportunities and technology careers are still abundant.
“Internet companies with good business plans that offer a product that is in demand will still succeed when they don”t over extend themselves,” Dominguez said.