Buy.com Shedding Staff

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
    $50 million.

    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.

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