Kozmo postpones IPO, lays off 24 employees
The online convenience store is delaying plans for a public offering and has laid off 24 workers at its New York headquarters.
Kozmo, which filed for the IPO in March, will wait until market conditions improve, sources close to the company said. Executives had wanted to take the company public by this month but were discouraged by market fluctuations, sources said.
Kozmo's IPO registration remains on file with the Securities and Exchange Commission.
"They hope the market has improved by September," said one source close to Kozmo. "They would really like to go out by then."
Company spokesman Michael Gordon declined to comment on whether the public offering was delayed, citing SEC regulations.
He said the layoffs were part of an effort to streamline Kozmo's operations and not a result of a decline in business.
"We are actively working to becoming a public company," Gordon said.
The layoffs, which constitute a fraction of the company's work force, "represent a fine-tuning of our organizational structure in order to ensure the efficient continued growth of our company," Gordon said.
Kozmo, which transports entertainment, food and household products to customers within an hour, employs about 2,200 people in 10 cities across the country. The company said it plans to expand into 10 more cities by the end of the year.
Just before it filed for an IPO, Kozmo received a 31 percent investment stake from Amazon.com, worth $60 million.
As the market has shifted into low gear, other companies have also postponed or withdrawn their plans to go public, including Deja.com, KBkids.com and IMX Exchange.
Valuations of Internet stocks--especially companies that sell goods to the public--began falling just before the last holiday season, when financial backers began to grow weary of the losses that technology companies accumulated.
Analysts have said Internet companies planning to proceed with public offerings now face skeptical investors.
The result has been a dramatic shakeout in many e-commerce sectors. Once high-flying companies, such as Boo.com and Toysmart.com, have ceased operations, while others, such as Petstore.com and Reel.com, have sold large chunks of their businesses. Many Net companies have begun cutting their staffs to save shrinking cash reserves.
Among the most recent companies to trim their staffs were online magazine Salon.com, Web portal AltaVista and online drugstore PlanetRx.com.
Separately, Kozmo is bumping into some old-world labor issues. The company confirmed today that many of its Seattle employees have refused to sign a waiver that would allow Kozmo to run background and Department of Motor Vehicle checks.
The company said that all employees have been asked to sign the waiver "in order to remain with Kozmo."
"The purpose of the policy is to protect our employees and customers and provide a safe workplace," said Kozmo spokesman Matt Higgens. "We also want to safeguard our company's assets."
Higgens added that many companies require employees to be subject to similar background checks and that Kozmo has a strong legal position.