NEW YORK -Creditors have pulled the plug on etown, the online content and e-commerce infrastructure provider for consumer electronics retailers and manufacturers.
Strapped for cash and unable to obtain further funding from investors, the six-year-old Internet operation was shuttered, and its 100 employees here and in San Francisco were sent home on St. Valentine's Day after the company's financial well ran dry. Workers received no severance and were not paid for the final two-week pay period. In the wake of the foreclosure, all etown assets were transferred to Best Buy, the company's largest individual investor and the deep pockets behind a recent bridge loan.
It is unclear whether the nation's No. 1 CE chain will keep or sell the company's assets, and how long it will maintain the etown website, www.etown.com, which was still operational last week. A Best Buy spokeswoman conceded that "it's very preliminary at this point and we're not sure exactly what we're going to do [aside from] assessing the net value of the company and determining how we're going to handle it." The retailer made an initial $10 million strategic equity investment in etown some 14 months ago through its e-commerce unit BestBuy.com.
Other investors included ZDNet, Sands Brothers, Gruber & McBaine Capital Management, Bedford Oak Partners LP and Valor Capital Management LP, which, along with Best Buy, participated in a $22 million financing round in December 1999.
"We had no choice but to shut down," said etown's chairman/CEO Robert Heiblim. "There were no finances to continue. It's very sad."
Adding to the poignancy of the foreclosure, he said, was that the company's recent shift from a B-to-C to a B-to-B focus was beginning to build momentum. "We were well convinced of attaining profitability within the year."
Within a year, etown laid off 22 percent of its work force in response to what president/chief operating officer Lew Brown described as "ongoing pressures from our investors and the generally poor condition of the financial marketplace."
The layoffs coincided with a decision by etown's customer service employees to vote on joining The Newspaper Guild-Communications Workers of America, reportedly to secure better pay and shorter and less erratic work hours. Brown called the timing "an unfortunate coincidence" and blamed the unionization effort on "a few former disgruntled employees."
Heiblim added that he is in discussions to restructure and revive the business, although he acknowledged that the effort would be "difficult." etown was founded in 1995 by a group of CE journalists as a comprehensive resource for researching, buying and using consumer electronics products. Its corporate parent, Collaborative Media, licensed content to retail and media partners and recently began to provide e-commerce infrastructure services to portals, ISPs, and CE merchants and manufacturers - including 3COM, JCPenney, SonyStyle.com, Ultimate Electronics and Yahoo.