eToys Inc. (Los Angeles), the once-high-flying entrepreneur of toy products over the Internet, has indicated a plan to file for bankruptcy protection within the next five to 10 days and be done with operations by spring. The timetable would be shutting down the web site by March and releasing all remaining employees on April 6, shortly after the company runs out of cash for operations. (On Dec. 18, 2000, eToys had revealed that its holiday sales would fall 40 percent short of expectations, and that it needed more cash to survive beyond March 31.)
This would be the end of a precipitous 18-month plunge from pre-Christmas 1999, when everyone was elbowing to shop over the Internet and the three-year-old company's stock sold for $86 a share on Nasdaq. In December 2000, it had plummeted to about $1 a share. The online retailer said in its statement earlier this week that its common stock and series D preferred stock are now worthless and that it does not anticipate being able to meet Nasdaq's requirements for retaining its listing. Nasdaq halted trading in eToys stock yesterday and has requested additional information. The company had outstanding liabilities of about $274 million as of Jan. 31, 2001, far exceeding what could be received by selling the company.
The company was created in 1996 by former Disney executive Toby Lenk and Bill Gross, the founder of idealab! (an Internet company incubator that still owns about 12 percent of eToys; Intel and venture capitalists own another 20 percent). For awhile, the e-tailer soared selling not only children's toys (both well-known Barbie dolls and obscure specialty items), but also music, hobby items, videos and software from its web site. It was, along with amazon.com and a few others, a blueprint for getting rich from Internet-based commerce.