The battered e-commerce sector yesterday claimed its biggest casualty yet when eToys - a US company once valued in excess of £12bn - filed for bankruptcy, declaring its shares "worthless".
The online toyseller said that it had no choice after failing to find a buyer. It said its stated debt figure of $274m (£190m) was likely to become "substantially higher" when the full amount of monies owing was finally calculated.
Shares in eToys were suspended, having last traded at just nine cents each and valuing the firm at £14m. At their height in 1999 the shares changed hands for $80 each.
"The climate we faced remained extremely harsh and a buyer did not emerge," eToys spokesman Ken Ross said.
The website will be closed on March 8, cash will run out on March 31 and all employees will be fired by April 6, the company added.
The collapse of eToys comes less than two years after it was being hailed as a business pioneer that stood to change the way people shopped for their toys forever.
Founded in 1998, it raised $50m in venture capital funding as a private company and a further $166m when it floated on the Nasdaq stock market in 1999.
Initial customer service was deemed to be poor and it struggled to fulfil orders during its first Christmas season. However, analysts and investors maintained it would emerge as a winner even if the dot.com bubble burst. Competitors like Toys R Us said they believed the "first mover" advantage of building a big internet presence would make it hard to compete with.
Executives invested heavily in rectifying the fulfilment problems, building state of the art warehouses and computer systems.
In December eToys said it was likely to run out of cash by March if it did not receive "additional, substantial capital infusion". Strong sales of $131m last Christmas suggested eToys might have turned the corner but it appears that the extra money it spent simply tipped it over the edge.
Analysts said it should have sold at least $200m worth of goods during the festive season to stay afloat.
Three days into the new year eToys said it would shut down its UK operation with the loss of 74 jobs. At one stage the operation, which had a turnover of £1.6m in its first six months, employed 100 people.
The announcement was made on the company's website with an image of children's favourite Bob the Builder asking "Can we fix it?" and a reply saying "No we can't".
Established toy retailers such as Toys R Us, Wal-Mart, Kmart and Target have been the biggest thorn in eToys side. A partnership between Toys R Us and online retailer Amazon.com was another blow.
UK e-commerce firms have not been immune from difficulties. Debt laden e-tailer LetsBuyIt.com was recently forced to refinance, while Boo.com and Clickmango.com folded.
