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Furniture.com gets cash after close call

On its last leg, the online retailer of sofas, lamps and other home decor receives a sorely needed cash infusion of $27 million.

After meeting with bankruptcy lawyers and watching its top executives resign, Furniture.com has received a badly needed $27 million cash infusion from a CMGI-led investor group.

The new investment came just in the nick of time. Furniture.com was on the brink of closing, sources within the company said. Last week, the vice president of operations, the head of human resources and a top IT executive quit.

Citing poor market conditions, the company has also withdrawn plans for an initial public offering, which it filed with the Securities and Exchange Commission in January. In its filing, Furniture.com had said it hoped to raise $50 million.

Chief executive Andrew Brooks told CNET News.com yesterday that he met with bankruptcy lawyers June 12 to explore the company's options.

"At no point was Furniture.com insolvent," said Brooks, who declined to specify how long he thought the company could survive on the new investment.

"We explored what was involved with a potential bankruptcy, and we did so, along with a host of other options, which included fund raising, potential mergers and acquisitions, and anything involved with protecting the interest of our creditors," he said.

The company cut 29 jobs, or 12 percent of its work force, in April.

Several once-promising companies have recently run out of money or have been unable to attract new funding, including Boo.com, Petstore.com, Reel.com and Toysmart.com. Analysts say investors have lost their taste for backing technology firms, mostly because of the heavy losses many have accumulated.

Furniture.com, a 2-year-old company based in Framingham, Mass., was among several Net firms that filed to go public just before the stock market's downturn. The company is among the most trafficked home decor sites, according to PC Data. Furniture.com said it received 19.6 million customer orders during the first quarter, a 46 percent jump from the prior quarter.

However, The Boston Globe reported last month that Furniture.com had trouble raising money from its previous backers. CMGI investment unit @Ventures and Bessemer Venture Partners were slow to pony up the additional $40 million that Furniture.com said it needed to keep the company operating, according to the Globe.

Brooks said that raising money is a struggle for all companies now.

"It's no surprise that it's more difficult to get access to capital than it once was," he said. "We started our fund raising in March, and it took longer than expected to close."

Part of the reason may have been the company's losses: In its January filing with the SEC, the company said that it lost $46.5 million in 1999 and that its cash reserves totaled $31 million.

Internet venture firm CMGI, which owns a 17 percent stake in Furniture.com, has seen several of its holdings delay their IPOs. The latest was search engine AltaVista, which postponed its January IPO because of what the company called an administrative delay.