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10 Tech Companies That Totally Imploded


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eToys
KB Toys bought eToys, but then went under. The New York City KB Toys pictured here during its going-out-of-business sale closed at the end of 2008. © MIKE SEGAR/Reuters/Corbis
KB Toys bought eToys, but then went under. The New York City KB Toys pictured here during its going-out-of-business sale closed at the end of 2008. © MIKE SEGAR/Reuters/Corbis

EToys, founded in 1997, had every intention of dominating the online toy market. When it went public in May 1999, it raised $166 million [sources: Gentile, German]. The company spent massive amounts on marketing to try to compete with retailers such as Toys R Us, Wal-Mart and Amazon. It also signed deals with America Online, Discovery Toys and Gap Inc. to increase its exposure. EToys managed to gain around 2 million customers and started a successful U.K. branch. The company suffered a public relations blow due to a slew of late deliveries for the 1999 holiday season, but did beat Toys R Us's online sales. It then laid out $150 million to build new distribution centers in Virginia and California. Despite sales increases, eToys was losing tens of millions of dollars each quarter and had worse than projected revenues during the 2000 holiday season. It had also accumulated $247 million in debt [source: Goldman].

The eToys stock price went from around $86 per share at its peak to 9 cents per share in the end [source: BBC News, Gentile]. Competitor Toys R Us partnered with Amazon to bolster its online sales. In a familiar story, eToys was unable to find enough new investment capital to keep things going after its spending spree and the dot-com went bust. It closed its U.K. site at the beginning of 2001. The company filed for bankruptcy in February 2001, shut down in March 2001, and laid off around 1,000 workers between January and its closing. KB Toys bought and resurrected eToys, paying $5.4 million for roughly $40 million in inventory, and an additional $3.35 million for the eToys site, name and logo [source: Saliba]. KB Toys went under at a later date, but eToys.com is still around -- under new ownership.


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