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.
