Letsbuyit finds saviour
Investment firm promises $46M, e-tailer drops bankruptcy bid
LONDON (CNNfn) - Troubled e-tailer Letsbuyit.com bounced back from near-bankruptcy Thursday after getting a last-minute 4 million euros and a promise of more.|
The U.K.-based company said it had received 4 million ($3.69 million) in funding commitments from a number of investors and a promise of another 50 million from German venture capital firm Kimvestor.
Letsbuyit CEO John Palmer told CNNfn.com that the company still planned to go ahead with its attempt to raise 40 million in funding from various investors.
He said the company was not committed to just one backer.
"We need to do a round of funding now. Schmitz is not the only option -- we have lots of options. We are not by any means locked into anybody," Palmer was quoted as telling Reuters.
Letsbuyit (ALBC) shares surged 162 percent to hit 63 euro cents on Frankfurt's Neuer Markt. The stock is worth a fraction of its year high of 6.50, which it hit on its market debut on July 21.
Palmer said the company's fourth quarter revenue reached 18 million, nearly double the previous quarter's. Revenue for the full year reached 39 million, from 2.2 million in 1999.
Full financial results will be released in mid-February.
Kimvestor, run by self-described "world famous hacker" Kim Schmitz, told Reuters that he expected Letsbuyit.com to return to profit in 18 months.
"The strategy will be a restructuring of the business, four offices will be closed, we will concentrate on the offices in Germany, UK and France and with the investment we are going to put in we aim to reach profitability within 18 months," he said.
Analysts were less than enthusiastic about Letsbuyit's prospects.
"They made 38 million euros in sales last year, and spent double that on marketing. They'll have to grow sales without putting any money into advertising. I'm not very hopeful," said Heidi Fitzpatrick of brokers Lehman Brothers. "They'll have to change their business model entirely to generate a return."
Schmitz has been known since his adolescence for hacking into computer networks at NASA, the Pentagon and at least one major bank.
He launched Kimvestor last January as a venture capital firm for Internet startups and is planning an initial public offering for the firm, which he values at 200 million, according to IPO documents.
CoShopper still interested
Norwegian Internet retailer CoShopper said it was still interested in buying
parts of Letsbuyit.
"We are still interested in doing something," CoShopper chief executive Frode Lervik was quoted as saying by Reuters.
A Dutch court had given Letsbuyit until today to come up with the funding or face a bankruptcy ruling.
The loss-making company has been looking to raise money to make up for the shortfall from its initial public offering, which only reaped about $60 million from a planned target of $180 million.
But investors' tastes for Internet retail stocks have soured after a slew of
high-profile online retailers failed last year, including pet supplies e-tailer Pets.com, fashion site Boo.com, and online price-comparison service Productopia.com
The Letsbuyit Web site, which invites buyers to pool their purchase orders to enable them to buy at discounted bulk prices, has a notice advising potential customers it is currently unable to take orders.
Senior management of the Internet retailer quit en masse earlier this month.
--from staff and wire reports