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Urban delivery e-tailer Webvan (Nasdaq: WBVN) said Thursday that it will shut its Atlanta, Georgia operations and cut 885 jobs as it strives for profitability and bids to strengthen its tenuous position on the Nasdaq exchange.
Webvan said that 485 workers will be laid off as the firm leaves Atlanta. The company also plans to cut another 400 workers, most from its Foster City, California headquarters and its Kirkland, Washington operations center. The cuts will leave Webvan with about 2,600 workers.
"In light of our business priorities, we believe that the company's resources can be more effectively and efficiently utilized to bring our other markets to profitability," said Robert Swan, Webvan's new chief executive officer.
The departure from Atlanta comes two months after Webvan left the Dallas/Fort Worth, Texas market, a move that resulted in 220 job cuts. The company has also exited the Sacramento, California market. With the exception of Chicago, all of Webvan's markets are now located along the West Coast.
Seeking Cash
Webvan said that its cash reserves had dropped to US$115 million at the end of the first quarter and that it is in discussions with investors about obtaining the additional $25 million it will need to continue operations past the end of this year.
Webvan also revealed that it had hired Goldman & Sachs to help it explore "financing and strategic alternatives."
Mixed Bag
The announcements came as Webvan reported a loss of $86 million, or 18 cents per share, for the first quarter of 2001, compared with a loss of $75 million, or 17 cents, a year ago.
Net sales were up more than 100 percent, to $77 million. Another plus sign is that Webvan's Fullerton, California fulfillment center, which serves the Orange County, California market, reached the cash-flow positive mark by the end of the quarter.
The first quarter was "the most challenging and the most rewarding period in Webvan's young history," Swan said.
Executive Decisions
Swan took over the leadership role from George Shaheen, who announced two weeks ago that he would leave Webvan after nearly 18 months as CEO.
A former General Electric executive, Swan joined Webvan in 1999 and had served as chief operating officer since February 2000.
Webvan has also announced several changes to its board of directors, including the resignation of former Yahoo! CEO Tim Koogle. Earlier this year, Webvan's founder, Louis Borders, resigned from the board as well.
Stock Pump
Webvan, which said earlier this month that it would fight a Nasdaq delisting notice, also announced that its directors had approved a 25-to-1 reverse stock split.
That move is designed to bring the per-share price above the $1 level, a key mark if Webvan wants to remain on the exchange.
In early trading Thursday, Webvan shares had fallen to 18 cents, after closing at 24 cents Wednesday. The stock hit a 52-week low of 6 cents on April 20th.
"At present, we have too many shares of
Webvan securities outstanding," Swan said.
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