johnnymk
08-15-2001, 03:13 PM
Online retail pioneer Egghead.com files for bankruptcy
By LINDA ROSENCRANCE
(August 15, 2001)
Pioneering online retailer Egghead.com Inc. said today it has filed for Chapter 11 bankruptcy protection and is selling its assets to Fry's Electronics, a privately held chain of electronics superstores based in San Jose.
Egghead also said it has laid off two-thirds of its employees.
Once a computer hardware and software retailer, Egghead Inc. was one of the first companies to close its brick-and-mortar stores to focus exclusively on selling online, transforming itself in January 1998 (see story).
In recent months, Egghead.com, based in Menlo Park, Calif., has laid off staff and taken other cost-cutting measures in an effort to become profitable, but a decline in sales has taken its toll on the company.
"We regret having to take this action, which was forced on us in recent weeks by a dramatic and unexpected decline in sales," Egghead President and CEO Jeff Sheahan said in a statement. "That made it impossible to reach profitability in the fourth quarter. We investigated a number of alternatives and were pleased with Fry's offer to purchase the assets of the company and continue running the business. ... We believe this action will allow the company to realize a value for its assets which will benefit our creditors."
The sale, which is subject to bankruptcy court approval, is expected to close by the end of September. At that point, Fry's is expected to operate the Egghead.com site.
Earlier today, the Nasdaq Stock Market halted trading of Egghead.com Inc. stock at 30 cents a share and requested additional information from the company. Nasdaq said trading will remain halted until Egghead submitted the required information.
By LINDA ROSENCRANCE
(August 15, 2001)
Pioneering online retailer Egghead.com Inc. said today it has filed for Chapter 11 bankruptcy protection and is selling its assets to Fry's Electronics, a privately held chain of electronics superstores based in San Jose.
Egghead also said it has laid off two-thirds of its employees.
Once a computer hardware and software retailer, Egghead Inc. was one of the first companies to close its brick-and-mortar stores to focus exclusively on selling online, transforming itself in January 1998 (see story).
In recent months, Egghead.com, based in Menlo Park, Calif., has laid off staff and taken other cost-cutting measures in an effort to become profitable, but a decline in sales has taken its toll on the company.
"We regret having to take this action, which was forced on us in recent weeks by a dramatic and unexpected decline in sales," Egghead President and CEO Jeff Sheahan said in a statement. "That made it impossible to reach profitability in the fourth quarter. We investigated a number of alternatives and were pleased with Fry's offer to purchase the assets of the company and continue running the business. ... We believe this action will allow the company to realize a value for its assets which will benefit our creditors."
The sale, which is subject to bankruptcy court approval, is expected to close by the end of September. At that point, Fry's is expected to operate the Egghead.com site.
Earlier today, the Nasdaq Stock Market halted trading of Egghead.com Inc. stock at 30 cents a share and requested additional information from the company. Nasdaq said trading will remain halted until Egghead submitted the required information.