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Egghead.com Posts $35 Million Loss

Egghead.com Inc., which recently transitioned from bricks and mortar to virtual stores, reported a net loss for the fourth quarter of fiscal 1998 of $35.0 million, or $1.51 per share.

That compares to a net loss of $35.9 million or $2.04 per share for the comparable period of fiscal 1997.

The loss for the fiscal 1998 fourth quarter includes a $37.6 million charge for the closure of all retail stores.

The company's consolidated net sales for the fourth quarter of fiscal 1998 were $74.5 million, a decrease of 16% from $88.9 million a year earlier. Fiscal 1998 fourth quarter net sales include $24.5 million of liquidation sales related to the closing of 80 stores as part of the previously announced reorganization. Ongoing operations achieved revenues of $30.5 million in the fiscal 1998 fourth quarter.

For fiscal 1998 the company reported consolidated revenue from operations of $293.1 million, a decrease of 18.8% compared to $360.7 million from operations in fiscal 1997. The total net loss for the fiscal 1998 year was $50.2 million or $2.40 per share compared to a net loss of $39.6 million or $2.25 per share for fiscal 1997. The loss for fiscal 1998 includes $37.6 million in restructure charges, savings of $5.0 million related to the 1997 retail restructure and final adjustments of $4.3 million related to the disposal of discontinued operations.

In commenting on the fiscal 1998 fourth quarter, Egghead.com CEO George Orban said: "Closing the retail stores in favor of repositioning Egghead as an internet commerce company culminates an 18-month period of dramatic change. The level of revenues achieved by our ongoing operations in the past fiscal quarter exceeded our expectations as did our cash position of $67 million."

Spokane, WA-based Egghead now operates www.egghead.com and www.surplusdirect.com.

Separately, Egghead said it entered into agreements with TheGlobe.com and Infobeat.com, further expanding the company's Internet marketing efforts.

The new agreements will integrate sales of Egghead.com's computer products merchandise through each of the partners' Web sites. Earlier this year, Egghead.com announced marketing partnerships with GeoCities, CNET, Yahoo! and USA.Net.