Bleeding in the technology sector clearly has not ended according to recent information on jobs and liquidity events in the technology world. One company announced that 17554 jobs vanished in the internet sector in April. This compared with only 327 job losses the previous year.

Another company reported that only five companies went public from the venture capital arena in the first quarter, and four of those were in health care. By contrast, 40 companies that were planning to offer public stock withdrew their fillings. Mergers and acquisitions also fell sharply.

While there are some apples and oranges comparisons because of the uniqueness of each new company, the value of companies that merged or went public fell 45 percent from the previous quarter. An informal survey by Brainworks Venture personnel uncovered a loss of 50 to 75 percent in the value of companies that had not yet exited the holdings of venture capitalists in the past year. This is comparable to the collapse in values on NASDAQ.

The once hot e-commerce sector had no liquidity events during the first quarter. Amazon.com has been forced to deny rumors that the number of customers is actually falling at its website. The number of households using the internet on a regular basis may have declined slightly in the past year.

The performance may be even worse in Georgia. A year ago, the computer programming and data processing jobs created in Georgia approached 11,000 from the previous year. In the latest report, Atlanta has actually lost 600 jobs in that category from previous year levels. All those Midtown buildings that were being built to meet the frenzy of job creation in the technology sector are now competing with existing buildings that are struggling to sublet space from technology companies with shrinking staff.

Even the latest quarterly survey by Price Waterhouse Coopers of Venture deals in Georgia does not provide much comfort. The $288 million in the first quarter is down dramatically from the $717 million just a year ago. Although the dollars remain well above all yearly totals before 1999, about a third of the investments went to one company for communications infrastructure development. Indeed, I will be surprised if all the venture capital allocated to Georgia companies in 2001 approach the amount issued in the first quarter of 2000.

The number of deals being financed remain high, but this is because the median deal (a number that needs more prominence in their report) is much smaller than the quarter before or the past year. Furthermore, there are signs that very early stage start-ups are not getting the same attention in Georgia as a year ago. The evidence is more ambiguous for the national venture investments at this time.

And yet, despite all this gloom and reduced values, e-commerce is not going the way of the hula hoop. According to the Census Bureau, e-commerce sales rose a healthy 67 percent above previous year levels in the fall.

To be sure, these gains are much smaller than the 5 year 84 percent annual rates forecast by Forrester, or the even more fantastic projected growth rates by the Gartner Group, two of the leading technology forecasters. However, much of the money raised for e-commerce in 1999 was used to subsidize internet consumption. There was no comparable financing for consumption subsidies by the end of 2000.

Certainly, comparing subsidized sales in the earlier period to nonsubsidized sales in the most recent period will reduce growth relative to trend. Therefore, I would not be surprised to see more than 60 percent growth in e-commerce from 2000 for all of 2001.

However, the virtual store is virtually gone. Brick and mortar operations with an internet presence are creating most of the growth in e-commerce. Customers want service that they are not sure will be delivered from their computer (although Dell has showed that service is possible on the internet).

Furthermore, developers do not need to stop building stores. Even with that fabulous rate of growth, e-commerce is only 1 percent of retail sales at this time.

Thus, the message is decidedly mixed. The internet can generate sales, but its greatest power is in business exchanges, information access, logistics efficiencies, and educational potential. Someday, the internet also will be where data is stored and unheard of computer power is delivered. Internet telephony will provide verbal access to knowledge or friends. An unparalleled variety of entertainment on demand also will be available.

Far from being a technology hula hoop, the internet is just beginning to exert its potential. But, as Thomas Edison once observed, learning what does not work also is making progress. That is the progress the venture community was learning last year.