Beleaguered Buy.com selling itself to founder
- 14 August, 2001 08:16
In yet another sign of the financial depths to which many online retailers have sunk, struggling Buy.com Inc. late Friday announced a deal to sell itself to company founder Scott Blum for just US$23 million.
As part of the deal, an investment company owned by Blum will pay 17 cents in cash for each share of Buy.com's stock. Blum will also immediately provide the Aliso Viejo, Calif.-based retailer of computer and electronics products with interim financing of up to $9 million, the two companies said.
The buyout deal climaxes a rapid fall from grace for Buy.com, which did $787.7 million worth of business last year and was the second-largest online retailer in the U.S., behind Seattle-based Amazon.com Inc. But like many other e-commerce ventures, including Amazon, Buy.com was hit hard by lower-than-expected sales that started during last year's holiday shopping season.
In February, the company announced a series of cutbacks, including a sharp decrease in the number of products it sells and the divestment or closing of all of its international Web sites. That was quickly followed by the resignations of Buy.com's CEO and chief financial officer and the disclosure of plans to lay off almost half of its employees.
Buy.com in April reported a first-quarter net loss of $50.1 million on revenue of $124.6 million, down 40 percent from the year-earlier sales level of $207.6 million. The company was also facing a possible delisting of its stock by Washington-based Nasdaq Stock Market Inc., which held a hearing on the matter last month.