August 29, 2000 4:35 PM PDT

A solid finish for shares of PlanetRx

Shares of PlanetRx ended the day almost 28 percent higher after being up almost 45 percent earlier in the day on news that the beleaguered online pharmacy was pulling out of Silicon Valley and heading east to cut its costs.

The company said late yesterday that it is moving its headquarters from South San Francisco, Calif., to Memphis, Tenn. The move is expected to be completed by the end of the year.

PlanetRx, which rose 16 cents to 72 cents at the end of regular trading, said the move will reduce its burn rate--or how fast a company goes through funding over time--by 50 percent. By moving to Memphis, the company will save on rent, communications, travel and labor, PlanetRx chief executive Michael Beindorff said.

Beindorff said layoffs would eventually be part of the move, adding that 40 to 50 of the 85 jobs currently in South San Francisco would be eliminated once the company gets to Memphis. The company expects to cut its costs from $13 million in the first quarter to $6.5 million in the third quarter.

"We're creating a more efficient growth curve for the organization," Beindorff said. "We have dramatically reduced our cash burn rate...There will clearly be layoffs associated with this."

Trimming the fat is what the majority of Internet companies are battling to do as they participate in the Web's own version of the popular TV show "Survivor." A purge is taking place as many companies have blown through their funding and are either closing their doors or scurrying to raise new money.

In June, PlanetRx laid off 70 employees, Special report: End of the Beginning and earlier this month it lost its chairman to a venture capital firm.

The company's stock has been in a freefall for months and has been submerged below $1 since Aug. 3. If it stays under $1 too much longer, there is a possibility that it could be delisted from the Nasdaq.

Shares of PlanetRx ended the regular trading session yesterday down 3 cents, or 5 percent, to 56 cents.

"Of course, all of this we are doing to help improve our position," Beindorff said of the possibility for delisting. "We have told analysts that we expected 10 to 25 percent quarter-to-quarter growth, and we believe we can continue to show healthy growth."

 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.