February 20, 2001 8:15 AM PST

Webvan bags its operations in Dallas

Webvan on Tuesday said it has ceased service in Dallas and laid off its entire staff there to conserve operating capital and focus on the profitability of its nine other markets.

Webvan's Dallas operations employed approximately 220 workers, who will receive 60 days severance effective Tuesday, the company said. The cash-strapped dot-com entered the Dallas market through its acquisition last year of HomeGrocer.com, another online grocery service.

Foster City, Calif.-based Webvan, which recently postponed the commercial launch of its service in northern New Jersey, Baltimore and Washington, D.C., said the move to halt service in Dallas was a necessary one and the right step to ensure the long-term viability of the company.

The move underscores the company's fight to survive. Like most dot-coms, Webvan has seen the bottom drop out of its stock price--its shares have lost more than 95 percent of their value in the last year and recently have been trading below $1 per share. The troubled company recently warned that it faces delisting from the Nasdaq because of its slumping stock.

In January, the once high-flying dot-com introduced a revised business plan centered on reducing its need for additional capital to fund operations this year. The company's new strategy focuses on profitability targets for its now nine U.S. markets; completion of the takeover of HomeGrocer; and a cash savings program to reduce annual corporate and operating expenses.

Webvan has said it expects to achieve a companywide, positive cash flow in the second half of 2002.

 

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