Dot-Coms Seek Means to Beat Stock Exchange Troubles and Possibly Bigger Bills

NEW YORK CITY-The Dow Jones Industrials and Transportation, Nasdaq Composite, NYSE Composite, Russel 2000, S&P 500 and S&P 100 all dropped yesterday by the market’s close. While this may be chalked up to a holiday slump, it may also be a bad omen for dot-coms–and as a result, for the local real estate market, which has relied to some extent on burgeoning e-commerce to keep its buildings filled.

In just two examples of the troubled waters dot-coms may be sailing in the next few months, AT&T is considering charging Internet retailers for every customer and a commission fee for sales, and Kozmo.com, is talking to Urbanfetch.com about a merger and consolidation of operations.

The Dow Jones closed yesterday down 28.1; DJ Transportation was down 53.02; the NYSE composite was down 2.57; the Russel 2000 dropped 1.49; the S&P 500 dropped 6.96; and the S&P 100 dropped 6.74. The Nasdaq had fallen more than 100 points in the day but was able to recover to a drop of only 5.45 by the close of trading. All of these drops reflect a continuing decrease in hope for the viability of many start-up dot-coms. As the pressure continues to mount, lay-offs, mergers and liquidation multiply and growing numbers of offices become vacant, the tight real estate market may find itself surprisingly roomy.

The Nasdaq drop is the biggest since the fall of stock value in May. Companies are fighting off the bite of a weak Euro, rising overhead and production costs from skyrocketing rent and oil prices and the slowdown of international interest in technology. Now, AT&T reportedly is reaffirming its consideration of a plan to charge Internet vendors every time AT&T brings a customer to the site and then again when a purchase is made.

Kozmo.com, a Manhattan-based Internet vendor and delivery service, began layoffs this summer of almost 300 employees from it’s headquarters and field service dispatchers. Kozmo.com sued its rival Urbanfetch.com, with offices in New York and London. Now it is reportedly progressing in talks to acquire the company that has posed the greatest threat to Kozmo.

A Kozmo.com and Urbanfetch.com merger would apparently mean the termination of many employees, as the two directly competing companies consolidate operations and office space. Kozmo had hoped to raise funds by going public in the spring of this year, but the Nasdaq drop forced the abandonment of the plan. Urbanfetch has never filed to go public.

The Kozmo and Urbanfetch merger is one answer to the increasingly hostile market. With offices in New York, this merger will be welcomed as relief to the space-starved market. Many other companies are now reporting revenue losses, and insiders in growing numbers are saying the relief could turn to disaster if the trend continues, resulting in an unraveling of the tight real estate market.