FLASHBACK: Theglobe.com shuts flagship business
Published: Aug. 3, 2001 at 4:39 p.m. ET
By Bambi Francisco & Steve Gelsi, CBS.MarketWatch.com
Firm cuts staff by half, vacates Manhattan headquarters
NEW YORK (CBS.MW) - Theglobe.com, one of the symbols of the Internet boom and bust, said Friday it will close its core business, fire half its remaining workers and try to sell off remaining units.
The company, running out of money to sustain operations, also will vacate its Manhattan headquarters.
The operator of Internet gaming Web sites and an early virtual-community settler said it was closing its community Web site and its small-business Web hosting property and is "significantly scaling down its online game operations."
When the company went public in 1998, its 20-something founders, Stephan Paternot and Todd Krizelman, each held $75 million worth of stock. The ex-Cornell University roommates appeared on the covers of magazines and became icons of the Internet boom.
The stock-market worth of the company now stands at $4 million. See Thom Calandra's StockWatch.
Last month, Pegasus Research named Theglobe.com among 60-plus Net firms it figured would exhaust their remaining cash by the end of the year. On Friday, Theglobe.com CEO Chuck Peck said he was "aggressively" seeking to sell assets.
In late April, Theglobe.com's stock TGLO, was relegated to bulletin-board status. The company was unable to maintain the Nasdaq's $1 minimum bid requirement. In the past two weeks, the average daily volume has been a tiny 27,800 shares a day. The shares Friday were selling for 13 cents each.
On May 15, Theglobe reported quarterly revenue dropped 33 percent to $4.7 million from $7 million. The company also narrowed its net loss to $9.4 million from $16.5 million.
Excluding non-cash charges, the company lost $6.6 million in the quarter, which is roughly the company's quarterly cash-burn rate.
The company, lamenting the steep fall in Internet advertising this year, had only $8.8 million in cash and cash equivalents at the end of the quarter on March 31.
Last month, Pegasus reported that 64 Internet companies were in danger of running out of cash within six months. The list included Theglobe.com and Webvan WBVN. Webvan, an online grocer and sundries purveyor, shut down soon after the report.
Internet closures began in the autumn of 2000, when Value America, PlanetRx, MotherNature and Garden.com closed their doors. They were followed by Etoys, an online toy seller.
Theglobe.com went public on Nov. 12, 1998, and opened up 900 percent from an offering price of $9, or a split-adjusted $4.50. Bear Stearns was the lead underwriter for the offering, which enjoyed the largest opening-day gain of any initial public offering in U.S. history.
Theglobe.com's staff reductions bring its job roster down to about 60 employees. The company said it would incur a significant restructuring charge in its September quarter to account for the staff cuts and write-offs on property and equipment.
Bearish
