January 25, 2001 7:20 AM PST

Webvan loses less than expected, revamps plan for 2001

Webvan on Thursday posted a narrower-than-expected fourth-quarter loss and announced a revised business plan centered on reducing its need for additional capital to fund operations this year.

The cash-strapped dot-com's guidance for its operating model for 2001 states that the company now does not anticipate the need for additional capital to fund operations during this year. Under the new plan, however, it will need to drum up an additional $40 million to $60 million in capital by the end of this year, or by early 2002, to fund next year's operations leading to the point of profitability.

The Foster City, Calif.-based company had earlier projected that at its current burn rate, it would run out of cash by this summer.

Webvan's new business strategy focuses on profitability targets for its 10 U.S. markets; completing the integration of HomeGrocer, which it bought last June; and a cash savings program to reduce annual corporate and operating expenses.

The company also said it has indefinitely postponed the commercial launch of its online grocery service in northern New Jersey, Baltimore and Washington, D.C.

The once high-flying dot-com, led by George Shaheen, former head of Andersen Consulting (now Accenture), last week warned that it faces delisting from the Nasdaq because of its slumping stock price. Shares of the company, which has seen its stock recently trade below $1 per share, have dropped from a 52-week high of $18.50 to a low of 21 cents a share.

Webvan has a little less than 90 days to see its stock climb above a dollar and remain there for at least 10 consecutive days to avoid being booted off the Nasdaq.

For the quarter, ended Dec. 31, the struggling online grocer reported a pro forma net loss of $109.1 million, or 23 cents per share, compared with a loss of $56 million, or 15 cents, in the year-ago period.

For fiscal 2000, the company said its pro forma net loss came in at $413.2 million, or a loss of 91 cents per share.

Revenue for the quarter reached $84.2 million, an increase from the $19.8 million the company posted in the same period a year earlier. For fiscal 2000, revenue totaled $259.7 million, a jump from the $35 million it earned for fiscal 1999. The revenue results include the full impact of HomeGrocer.com sales over these periods, Webvan said.

Analysts surveyed by First Call had expected Webvan to post a loss of 24 cents a share on revenue of $89 million for the quarter and had foreseen revenue of $254.1 million for the year.

The quarterly results come the same week that Webvan announced plans to jump into business with PetsMart.com, one of the last surviving online pet stores. Beginning Friday, Webvan will host a PetsMart tab on its front door and will deliver the pet products. The tab also takes customers to a new Web page created for the joint venture.

After Webvan's fourth-quarter earnings warning earlier this month, several investment banks issued downgrades on the company's stock and reduced earnings and revenue expectations.

Analysts at Deutsche Banc Alex Brown recently clipped their rating on Webvan's stock to "market perform" from "buy" and said the company's revenue shortfall had to do with both delivery capacity constraints in certain cities and a decline in new orders.

Deutsche Banc analysts also noted that Webvan would likely require additional capital sometime in the third quarter of 2001 to revamp existing distribution facilities and fund continued growth.

Webvan's fourth-quarter pro forma net loss and loss per share exclude the amortization of goodwill related to the company's acquisition of HomeGrocer, noncash compensation and restructuring charges. They include the operating results and share counts of HomeGrocer for the entire fiscal year.

 

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