*Game Almost Over for eToys?

Share this content:
EToys Inc.'s stock fell yesterday by 72.73 percent to 9/32, or 28 cents a share, after investors signaled their extreme displeasure at news that the online retailer would miss third-quarter revenue estimates because of poor holiday sales.


The drubbing comes on the heels of a Dec. 15 announcement by eToys that net sales for the fourth quarter are expected to be between $120 million and $130 million. The Santa Monica, CA, retailer had said earlier that sales for the current quarter would be $210 million to $240 million.


Once a highflier and the No. 1 online retailer of toys, eToys' stock is now down nearly 99 percent on the Nasdaq from a 52-week high of 40 1/4. The market cap, which at one point was nearly $2 billion, is $37.2 million.


A company statement said that the "revenue shortfall this quarter was in large part attributable to a harsh retail climate driven by concerns over the economy, the current disfavor of Internet retailing and a consumer population meaningfully distracted by the presidential election and its aftermath."


T.K. MacKay, equity analyst at Morningstar.com, goes so far as to predict eToys' demise.


"While the company blames its revenue shortfall in part on the soft retail climate, even blockbuster sales this Christmas may not have been enough to keep the company in business for long," MacKay said in a statement.


"Now," he added, "with such a massive reduction in sales expectations for the all-important December quarter, it is highly unlikely that eToys will survive as a stand-alone company."


In fact, eToys now has cash to last only through March 31. The company has hired Goldman Sachs & Co., which handled its IPO, to look for a potential buyer. Other alternatives being explored are a merger, asset sale, cash infusion or a financial restructuring.


"In order to continue operations in 2001, the company will require an additional, substantial capital infusion," the eToys statement said. "There can be no assurance that additional capital will be available to the company on acceptable terms, or at all."


On Dec. 31, the book value of eToys' inventory is expected to stand at $60 million to $70 million.


Because of the revision in its cash and cash equivalent estimates, eToys said it would be forced to take steps "to reduce its operating costs, which will include a reduction in work force. The company expects to announce a specific plan for the work force reduction in January 2001."


Other Internet companies were snared in eToys failures. Most notably was Amazon.com which fell 13 percent to 19 7/8. Ashford.com Inc. plummeted 51.5 percent to 50 cents; Barnesandnoble.com dropped 20 percent to $1.50 and Yahoo lost 3 percent to $32.
close

Next Article in Digital Marketing

Sign up to our newsletters

Company of the Week

Since 1985, Melissa has helped thousands of companies clean, correct and complete contact data to better target and communicate with their customers. We offer a full spectrum of data quality solutions, including global address, phone, email, and name validation, identify verification - available for batch or real-time processes, in the Cloud or on-premise. Our service bureau provides dedupe, email/phone append and geographic/demographic append services for better targeting and insight. For direct mailers, Melissa offers easy-to-use address management/postal software, list hygiene services and 100s of specialty mailing lists - all with competitive pricing and excellent customer service.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above