December 16, 2000
Who says virtual life doesn't imitate the real thing?

Look at EToys Inc. Last year, it was one of the biggest and shiniest e-tailing sites around. This year it's so broken and battered, it'll be lucky to escape the second-hand shop. The Los Angeles-based company has thrown up the Internet equivalent of a going-out-of-business banner -- a home-page "Super Sale - 75% Off" announcement.

EToys mashed down hard on the panic button yesterday, announcing that its holiday sales were a disaster, running less than half what had been expected. And with that, it put itself on the auction block, hiring Goldman Sachs & Co. to search for a buyer.

The company said it would run out of cash by March 31 if it did not find a buyer and said it would begin a series of layoffs just as soon as the holidays are over.

EToys had been projecting sales this quarter of $210 million to $240 million but now expects to hit #130 million at most. That's only slightly better than the $106 million it rang up in the same period last year.

Many consumers who ordered toys and other gifts from Web sites were disappointed last year when the goodies didn't show up in time for Christmas. Indications are that many of those consumers are doing their shopping the old-fashioned way this year -- driving to the mall and hauling the stuff home by hand. Amazon's entry into toys was also a major blow to EToys, analysts said.