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Webvan news: No more Atlanta, revenue is up, new CEO, reverse stock split
Webvan sales grew to $77.2 million in the first quarter from $37.5 a year ago. But it pulls out of Atlanta, leaving seven markets where it still operates.
Beleaguered Webvan Group Inc. will cease operations in Atlanta, the company announced today. The company is now serving Chicago, Seattle, Portland, Ore., the San Francisco Bay Area, Los Angeles, Orange County and San Diego. It halted deliveries in Dallas/Forth Worth in Febnruary.
In addition, Webvan named Robert Swan as chief executive officer. Swan previously served as Webvan`s chief operating officer, a post he assumed in September 2000. He joined Webvan in October 1999 as senior vice president of finance and was named chief financial officer in February 2000. Swan has joined the company`s board of directors. He replaces George Shaheen who resigned Feb. 13.
Webvan reported that net sales for the first quarter 2001 totaled $77.2 million, an increase of 106% over pro-forma net sales of $37.5 million for the first quarter of 2000. Sales for the first quarter of 2001 include 51 days of revenue from Webvan`s Dallas/Ft. Worth market. Net loss for the first quarter was $86.1 million compared with a pro-forma loss of $75.4 million in the first quarter of 2000. Pro-forma net loss and net loss per share exclude the amortization of goodwill resulting from the company`s September 2000 acquisition of HomeGrocer.com, amortization of deferred compensation and restructuring charges and includes HomeGrocer`s operating results for the first quarter of 2000.
Gross profit for the first quarter was $21.7 million, or a gross margin of 28.1% compared to a pro forma gross profit of $7.8 million and a gross margin of 20.9%, for the comparable period in 2000.
Webvan also reported combined company-wide inventory turns of 17.8 times on an annualized basis. The company stated that its active customer accounts in the preceding 12 months ending March 31, 2001 exceeded 761,780. Repeat orders represented 84.1 percent of total orders during the period. The average order size for the recently completed quarter was $114.
In addition, Webvan reported that it is in preliminary discussions with existing investors regarding possible debt or equity financing of approximately $25 million. Webvan has engaged Goldman Sachs & Co. to assist in evaluating its financing and strategic alternatives. The company today also announced plans for a 25-to-1 reverse stock split, subject to shareholder approval at the upcoming annual meeting.
"With approximately $115 million in cash, cash equivalents, and marketable securities on hand at the close of the first quarter 2001, we will need $25 million in capital to pursue a fully-funded business plan, allowing us to fund operations up to the point when the entire company is cash-flow positive,” Swan said. “We currently anticipate reaching this cash-flow milestone in the second half of 2002."
"The first quarter of 2001 was undoubtedly the most challenging and the most rewarding period in Webvan`s young history," Swan said. "In this period we saw substantial improvements across our operations, leading to a solid financial performance. I am pleased to announce that our Fullerton, California customer fulfillment center, which serves Orange County, exited the first quarter with a positive cash flow. Passing this milestone is a significant accomplishment for Webvan, proving the viability of our business model and clearly demonstrating our ability to run a profitable enterprise."
The company said today that its board of directors has approved a 25-to-1 reverse stock split, subject to approval by Webvan`s shareholders at the annual meeting to be held in June. "At present, we have too many shares of Webvan securities outstanding," Swan said. "A reverse split of 25-to-1 will reduce our number of outstanding shares to approximately 20 million. We believe such a move is in the best interest of our shareholders. A reverse split will also support our effort to raise the Webvan share price above the Nasdaq`s $1 per share listing requirement."