[eCommerceTimes] Goldman Sachs Posts E-tail Death Watch

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From: Linda (joelinda1@home.com)
Date: Thu Jun 01 2000 - 12:02:10 PDT


 Goldman Sachs Posts E-tail Death Watch
 By Nora Macaluso
 E-Commerce Times
 June 1, 2000

 According to a new report from Goldman Sachs, at least 10 key e-tailers will
 be faced with the daunting task of raising cash as soon as this year or next.

 Among the companies identified by Goldman analyst Anthony Noto are
 Beyond.com (Nasdaq: BYND), Autoweb, Inc. and Peapod, Inc. (Nasdaq:

 Noto calculated the cash positions of 32 publicly traded online retailers by subtracting each
 company's operating loss -- or cash burn rate -- in each quarter from the company's first
 quarter cash position. "We estimate that 10 will need to raise money this year or early next
 year, which could prove challenging for some with unproven business models and lack of
 category leadership," Noto wrote.

 'Pioneers' Fare Well

 Other companies, most notably Amazon.com (Nasdaq: AMZN) and Priceline.com (Nasdaq:
 PCLN), are "pioneers with proven business models," and will not need to look to capital markets
 for funding, according to Noto. Priceline is on track to reach breakeven in this year's fourth
 quarter, he said.

 Seven of the 32 firms have sold securities to raise money this year, while others have cut
 spending to conserve cash in light of a downturn in e-commerce stock prices, Noto added.

 Continued Shakeout

 The e-commerce sector has fallen out of favor amid skepticism about the likelihood of profits,
 and companies with huge cash-burn rates and no income have already started to fall by the
 wayside. "A continued shakeout will likely strengthen positions for leadership companies and
 decrease competitive clutter," Noto said in his report.

 Noto listed Barneandnoble.com (Nasdaq: BNBN), eBay, Inc. (Nasdaq: EBAY) and Ashford.com
 (Nasdaq: ASFD) among "first-tier" companies that have enough cash on hand to fund their
 expansion plans without tapping the markets. eBay, he noted, is currently the only profitable

 Conserving Cash

 Drugstore.com (Nasdaq: DSCM), HomeGrocer.com (Nasdaq: HOMG), Mothernature.com
 (Nasdaq: MTHR) and PlanetRx (Nasdaq: PLRX) all made Noto's list of "second-tier" companies
 that will have to conserve cash this year and may need to seek financing as well.

 Other e-tailers that may have difficulty staying in business, according to Noto, are Pets.com
 (Nasdaq: IPET), Autobytel.com (Nasdaq: ABTL) and Buy.com (Nasdaq: BUYX).

 With investors becoming more selective about e-commerce securities, the companies are
 finding it harder to raise cash. Noto said companies in his second and third tier groups that
 need to raise capital this year "will have difficulty."

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