down to 20 cents a share, ailing Internet grocer Webvan Group Inc.
Thursday said it is, in essence, seeking an angel with about $25 million to invest in order for the company to pursue a fully funded business plan.
Webvan, which just posted a pro forma net loss for the first quarter of $86.1
million, said it is laying off 885 employees, including 400 at its corporate
offices, shutting down operations in Atlanta and Sacramento, Calif., and
planning a 25-to-1 reverse stock split if shareholders approve.
The stock split would put the share price back above Nasdaq’s minimum price
for listing — $1.
The Foster City, Calif.-based company also named its COO, Robert Swan, as its
new chief executive officer, following the departure of chairman and CEO George Shaheen earlier this month.
Webvan said it hired Goldman Sachs & Co. “to assist in evaluating its
financing and strategic alternatives.”
“With the approximately $115 million in cash, cash equivalents, and
marketable securities on hand at the close of the first quarter 2001, we will
need $25 million in capital to pursue a fully-funded business plan, allowing
us to fund operations up to the point when the entire company is cash-flow
positive,” Swan said. “We currently anticipate reaching this cash-flow
milestone in the second half of 2002.”
That $115 million, however, is down from $212 million at the end of last
Net loss for the first quarter was 18 cents a share compared with a pro-forma
loss of $75.4 million, or 17 cents per share in the first quarter of 2000.
Net sales for the first quarter 2001 totaled $77.2 million, an increase of
106 percent over pro-forma net sales of $37.5 million for the first quarter
Analysts had expected a loss of 19 cents a share.
Webvan said it will continue its online retailing service in Chicago, the
Pacific Northwest (Seattle, WA and Portland, OR), the San Francisco Bay Area,
and Southern California (Los Angeles, Orange County, San Diego).
About 485 positions are affected by the decision to close the Atlanta market.
Eighteen jobs were lost Wednesday in the closing of the Sacramento operation.
And the company said it is eliminating approximately 400 positions at its
corporate offices in Foster City and Kirkland, Wash. Webvan currently employs
approximately 3,500 workers.
“While we regret the impact this decision has on our loyal customers in the
Atlanta area, we firmly believe that this is a necessary and right step for
the long-term viability of Webvan,” Swan continued. “we believe that the
company’s resources can be more effectively and efficiently utilized to bring
our other markets to profitability.”
Early last fall Webvan announced a $1 billion stock-based acquisition of
HomeGrocer.com. Since then its stock has dropped as low as 6 cents a share.
It was down 4 cents to 20 cents in early trading today.
Meanwhile, Webvan said that Ronald D. Fisher, managing general partner of
Softbank Capital Partners, has joined the company’s board of directors. Tim
Koogle and Michael Moritz have stepped down as members of Webvan’s board of
directors. Koogle is the vice-chairman of Yahoo! Inc. Moritz is a general
partner with Sequoia Capital.
Internet Grocer Seeks an Angel