Buy.com Shedding Staff
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Its stock trading at less than $1 and falling, troubled Internet retailer buy.com reported a pro forma fourth quarter loss of $27.3 million, but said it is taking aggressive measures to move toward profitability, including shedding 10 percent of its staff - about 25 people.
Other measures include the sale of buy.com's United Kingdom operations to an unspecified European buyer and shutting down its Canadian Web operation. "We are focused on driving our business to positive operating cash flow in (the) fourth quarter (of) 2001," said Greg Hawkins, chairman and chief executive officer.
The company had a difficult fourth quarter, losing $27.3 million or 20 cents per share, compared with a loss of $40.9 million or 44 cents per share the year before. Analysts had been anticipating a loss of 19 cents a share.
Revenues for the fourth quarter were $196.7 million, down 2 percent from $200.7 million in the same period a year ago.
The stock plunged 28 cents in early trading to 62 cents after closing yesterday at 90 cents. Its 52- week high is $33.
"The fourth quarter was an intensely competitive environment with general softness in the technology sector," Hawkins said, adding that "the continued tight capital market for the e-tail sector has caused us to proactively re-evaluate our business and implement several strategic initiatives designed to accelerate buy.com's drive toward profitability."
Initiatives include a new focus on its historical strength in technology and consumer electronics categories. In 2001, the Internet "superstore" said it will focus its resources on core categories including computer, software, consumer electronics, wireless and clearance.
Also, the company will focus most of its 2001 discretionary marketing resources toward online marketing media in its core categories, as opposed to traditional marketing efforts. And the company said it expects to greatly reduce overall marketing expense seeking to generate greater marketing efficiencies.
Buy.com said that first quarter 2001 expectations include:
- Sales are expected to be in the range of $132 million to $137 million.
- Gross margins are expected to increase to between 10.5 percent and 11.5 percent.
- Sales and marketing expenses are expected to decrease to between $14 million and $16 million.
- Cash and marketable securities are expected to be between $45 million and
The company said that pro forma net loss is expected to narrow to less than 5 percent of sales for 2001, with positive operating cash flow in the fourth quarter.