The negative surprise didn't take long, I'm afraid. Question is whether this will carry over to Amazon.com as well... could be time to short Amazon again?
Friday December 15 8:15 PM ET
eToys Warns on Earnings, Plans Layoffs
LOS ANGELES (Reuters) - Online toy seller eToys Inc. (NasdaqNM:ETYS - news) on Friday warned that its fiscal third-quarter sales would fall short of expectations due to weaker-than-expected holiday buying and said it was exploring a merger, asset sale or other restructuring.
The company, which said it plans to announce layoffs in January, has hired investment banking firm Goldman Sachs to find a way to keep its doors open. At present, eToys has enough money to continue operations through the end of March.
``We are disappointed that sales have not materialized to the degree we had expected,'' eToys President and Chief Executive Toby Lenk, said in a statement.
The Los Angeles-based company on Friday slashed its quarterly net sales forecast by almost one-half to $120-130 million, from its previous estimate of $210-240 million.
The company also said its operating loss for the quarter will be 55-65 percent of revenue, rather than the 22-28 percent previously projected.
Wall Street analysts, on average, had expected the company to lose 40 cents a share in the quarter, according to First Call/Thomson Financial. eToys said it lost 59 cents a share in the comparable 1999 quarter.
Online retailers like eToys have been hobbled by insufficient sales, dwindling cash reserves and diminished stock prices. In November, Internet pet supply retailer Pets.com Inc. hung up its popular Sock Puppet mascot and became the first publicly traded dot-com to shutter its business.
Executives at eToys pinned blame for the shortfall on a harsh retail climate driven by concerns over the economy, the current disfavor of Internet retailing, and the recently resolved presidential election's distracting influence on potential buyers.
eToys had previously said it had enough funding to continue operations through June 30, 2001.
eToys shares were off 1/32 to close at $1-1/32 on Friday. The stock, which had flirted with the $90 mark last October, dipped below $1 in after-hours trading |
