PINK SLIPS MAY MEAN A BLUE CHRISTMAS DESPITE LAYOFFS, L.A. COUNTY'S ECONOMIC PICTURE STILL POSITIVE.

Byline: Jesse Hiestand Staff Writer

Shares in Stan Lee Media Inc., the Encino-based creator of animated characters for the Internet, plummeted Monday, forcing a halt in trading after it suspended operations and laid off most staff when a financing deal fell apart.

The setback marks the latest financial failure among Web entertainment sites but was overshadowed by the layoffs of 5,000 people Monday at managed care giant Aetna Inc. and the 2,700 jobs that consumer products maker Gillette Co. plans to cut over the next year.

Both companies said they need to increase profitability, moves that come amid mounting indications of economic sluggishness and eroding consumer spending.

About 140 Stan Lee workers lost their jobs at the company founded and named after the famed co-creator of classic characters like Spider-Man, the Incredible Hulk and X-Men.

``The market put us in a very vulnerable position,'' John Cassell, director of special projects and one of the few remaining executives at the company, said Monday. ``What would have been routine financing was affected by these strange market conditions.''

Saying it needed ``additional information'' from Stan Lee executives, the Nasdaq composite index halted trading of the company's stock when it fell to 13 cents, 84 percent below Friday's close. The stock had been trading at more than $28 a share in the past year.

The company said a $2.2 million bridge financing agreement and a $40 million equity line announced earlier this month collapsed because its stock fell below $1 per share.

``We haven't seen signs of a slowdown in Los Angeles yet but you are definitely seeing the ongoing layoffs in the entertainment Internet stocks,'' said Jack Kyser, chief economist of the Los Angeles County Economic Development Corporation.

Economists remain troubled by rising energy costs, particularly natural gas, which may force some manufacturers to slow or suspend operations in the first quarter, and a sense that people are being more cautious about their spending.

``The overall melody is still positive but there's a heck of a lot of sour notes if you listen close enough,'' Kyser said.

Judging by employment figures, Los Angeles County shows continued economic strength.

The county's unemployment rate for November declined to 5 percent, down five-tenths of a percent from October. The drop was so steep that the state Employment Development Department had to recheck the numbers.

Countywide, November nonfarm employment increased by 48,000 jobs to 4,550,000, largely on the expected boost in seasonal retail trade. Every other sector was also up, from government jobs to business services, wholesale trade to real estate. The only exception was construction, which declined by 200 jobs.

``We'll see what happens down the road but so far things look pretty good,'' said Bill Freed, labor market consultant for the EDD's Los Angeles office. ``Los Angeles, and California in general, was late to come into the upswing so maybe we'll be last in and last out.''

Freed said his department does not keep labor statistics on the dot-com sector.

Cassell of Stan Lee said the company would continue to operate and try to find new financing and markets for Stan Lee's creative talents.

``We're doing everything we can to maintain business continuity,'' he said. ``The key is that Stan Lee is the creative backbone of this company and regardless of the challenges that have come upon us, he remains as a viable force.''.

Cassell said the market may have painted his company with a broad dot-com brush, punishing it because part of its operations were on the Internet. Unlike some companies that began on the Web and derived most of their revenue from online advertising and e-commerce, Cassell said Stan Lee Media was more diversified, with deals still in the works for motion pictures, amusement park rides and more.

``The company began initially using the Internet as a launching point,'' he said. ``There may have been some latent stigma that affected our stock price, even though we are not remotely a dot-com company. The actual revenue model revolved around licensing and merchandising. No one here was trying to monetize the Net.''

The Associated Press contributed to this report.