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Technology Stocks : Egghead Computer (EGGS) -- Ignore unavailable to you. Want to Upgrade?

To: zax who wrote (8294)	8/16/2001 1:54:50 AM
From: zax	Respond to of 8307

MENLO PARK, Calif. -- Egghead.com Inc. became the latest dot-com casualty, as the Internet retailer filed for Chapter 11 bankruptcy protection and fired two-thirds of its staff. Egghead also agreed to sell its assets to Fry Electronics, a closely-held chain of electronics superstores based in San Jose, Calif., for an undisclosed amount. The company fired about 200 workers, a spokeswoman said. One-third of of its employees were asked to remain with 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," Jeff Sheahan, president and chief executive officer of Egghead.com, said in a written statement. This decline in orders "made it impossible to reach profitability in the fourth quarter, he said. Assets not acquired by Fry Electronics are expected to be sold under bankruptcy-court supervision. Fry Electronics also is expected to operate Egghead's Web site after the transaction. Egghead will continue to operate its business under bankruptcy-court supervision pending the close of the sale, expected in September, subject to approval of the bankruptcy court. The company had planned to report second-quarter results Wednesday, but will no longer do so in light of the bankruptcy filing, a spokeswoman said. As recently as Feb. 22, the company backed its prediction that it would reach profitability by the fourth quarter. In late April, however, Egghead posted a first-quarter loss of $8.12 million, or 19 cents a share, on revenue of $85 million. In April, the troubled retailer announced plans to cut about 29% of its work force, leaving about 434 workers. A month earlier, Egghead eliminated 77 jobs. In May, the company received notice from Nasdaq that its shares were subject to delisting for failure to meet the $1 minimum bid rule. In June, the company authorized a 1-for-10 reverse stock split. To raise cash in May, the company sold its remaining stake in Onsale Japan K.K. and planned to record a $2.1 million gain in the second quarter. In the mid- to late-1980s, as strip malls blossomed across the country, the company, then known as Egghead Discount Software, grew from a few stores on the West Coast to a national chain. Its 1988 initial public offering met strong demand on Wall Street. But as the software retail industry consolidated in the 1990s, Egghead faced fierce competition, particularly from CompUSA Inc. In 1996, Egghead began closing its stores to transform itself into a pure-play online retailer. After shedding hundreds of stores by late 1998, Egghead changed its name to Egghead.com in November of that year. Sales grew quickly in 1999, but losses mounted as online retailing proved to be just as competitive as the bricks-and-mortar world. In July 1999, rival Onsale Inc. agreed to buy Egghead, keeping the more well-known Egghead name. Trading of Egghead (EGGS, news, msgs) was halted. The stock last changed hands at 30 cents, down a penny, or 3.2%. The Nasdaq Stock Market said in a prepared statement Wednesday that it changed the trading halt status in Egghead to "additional information requested" from the company. Fry's Electronics sells a variety of electronics products -- similar to what Egghead.com sells -- through about 18 stores. While the stores are mostly in California, the company has locations in Arizona, Oregon and Texas.