RealTime IT News

Egghead.com OKs Reverse Stock Split

Computer goods retailer Egghead.com Inc., one of the few e-commerce pure plays that started out as a bricks and mortar chain, said its board of directors has approved a reverse stock split in part to help stave off a delisting of its stock from the NASDAQ exchange.

The stock has been trading under $1 for some time, and that's the magic number for continued listing with the big kids. The stock was at 60 cents in mid-morning trading.

The company said it anticipates the reverse split to be in the range of 5-for-1 to 10-for-1.

"This action is part of a strategic plan to enhance our appeal to a wider audience of potential investors and help us attract additional capital, which would in turn strengthen our working capital position and enable us to pursue acquisition opportunities should we so choose," said Jeff Sheahan, president and CEO of Egghead.com, in a statement. "In addition, we believe it will reduce the risk of a potential NASDAQ delisting."

The company said it has retained Roth Capital Partners LLC to assist in its private capital raising efforts. Egghead has been executing a turnaround strategy and in February it entered into a $20 million secured inventory financing credit line with IBM Credit Corp.

In April, following up on earlier job cuts, Menlo Park, Calif.-based Egghead.com slashed another 178 jobs or 29 percent of its remaining staff in a move that the CEO referred to as "right-sizing."

Formerly a B2C company, Egghead now is focused on the Small- to Medium-sized Business (SMB) community. For the quarter ended March 31, revenues fell 44 percent to $85.3 million. Net loss fell 68 percent to $8.1 million. The company has not had a positive EPS quarter in three years.