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Hailed just two years ago by many analysts as a shining light in the new economy, online supermarket Webvan Group Inc. halted operations, saying today it would file for bankruptcy protection and lay off its 2,000 employees.
The decision comes shortly after shareholders recently voted to implement a one-for-25 reverse stock split and had imposed cost-cutting measures to stay afloat. The moves however were not enough, said Chief Executive Robert Swan, to salvage the struggling company from today?s languid economic environment.
The company would seek to delist its common stock from the Nasdaq National Market and proceed with an orderly wind-down of its operations, including the sale of its assets and business, it said in a statement. The Internet-based grocer had struggled in recent months as volume dropped and venture capital had dried.
?Webvan has weathered numerous challenges, and in a different climate I believe that our business model would prove successful,? Swan said in a statement. ?At the end of the day, however, the clock has run out on us.? The retail serviced markets in Chicago, Los Angeles, Seattle, San Diego, San Francisco Bay, Portland, Oregon, and California's Orange County.
Webvan debuted as a publicly traded company in November 1999 reaching a high of $34 a share. Friday it closed at 6 cents.