The vote at the company's shareholder meeting here came after Webvan was told by the Nasdaq late Thursday that it had until July 23 to implement the split, company spokesman Bud Grebey said. After that, Grebey said, Webvan shares must stay above $1 to remain on the Nasdaq.
The split would convert 25 Webvan shares into one new share worth $2.25, based on the stock's closing price Thursday of 9 cents. However, most analysts see the move as a last-ditch effort to put some pop back into the stock.
The Nasdaq warned Webvan earlier this year that it faced delisting because of its low share price. Businesses are first hit with a warning after their shares sink to less than $1 or $5, depending on the stock, for more than 30 days. For companies to keep their seats on the exchange, their shares must trade above the minimum bid price for 10 consecutive days during the next 90 days.
The split is designed to boost the stock above $1. Some of the company's shareholders were optimistic about its chances.
"I have a lot of confidence in the current leadership," said Judy Barton, who has been a shareholder since the company's initial public offering in November 1999. "I've continued to buy Webvan stock. It's a great service, and I think it's going to make it."
Others were less confident.
Dave Mungenast said after the meeting that he doubted the split would keep the stock above $1 for the full 10 days.
"The thing I'm afraid of is that once trading begins in the new stock, people will start dumping," Mungenast said. "If that happens, the bottom of the stock will drop out pretty fast."
Shares in Webvan have crashed to less than a dime, falling as low as 6 cents this year.
The company has endured a host of setbacks during the past year. It missed a self-imposed deadline of breaking even at its Oakland, Calif., distribution center. Former Chief Executive George Shaheen resigned, and the company has had to lay off hundreds of employees and abandon three cities to conserve cash.
Should the reverse split buoy Webvan's stock, the company still faces a cash crunch sometime in the second quarter of next year.
A successful reverse stock split is a long shot, according to analysts and industry observers. Many technology companies have tried it but have watched as their new issues have fallen back below $1 within days of the split.
Tom Stone, who has held Webvan stock for more than a year, said he and most of the investors are not counting too much on the split but are holding out hope that the company will partner with a large brick-and-mortar grocer.
Stone cited the recent deal between British grocer Tesco and Texas-based GroceryWorks.com, as well as last year's acquisition of Peapod by Dutch grocer Royal Ahold.
"I keep waiting for Webvan to work something out with (U.S. grocery company) Kroger or maybe Albertson's," Stone said. "That's really the company's best bet."