Asreported, Quokka executives were considering a bankruptcy filing if they could not locate a buyer or partner. According to sources, the last hope for such a savior evaporated Monday, forcing executives to conclude that bankruptcy was the only option.
As a result, San Francisco-based Quokka dismissed most of its staff of about 150 people on Wednesday, retaining just a handful of employees, sources said.
The sports media company had landed high-profile partnerships with NBC, the International Olympics Committee, and Major League Baseball. But those alliances could not protect it from an online advertising drought and investor apathy.
Rival sport sites have met a similar fate. Broadband Sports and Rivals.com recently shuttered operations. And CBS SportsLine said Wednesday that it would cut its staff by more than 60 people in an effort to cut costs.
Sources said Quokka intends to file for Chapter 11 bankruptcy protection, which would shield it from creditors while allowing the company to reorganize its business.
By filing Chapter 11, the company could re-emerge as a slimmed-down content site--or another business entirely. However, sources said the company's executives expect to shutter the site. As of late Wednesday, the Web site was still online.
Wednesday's developments come just days after the precipitous descent of its share price.
On Monday, the company completed a 1-for-50 reverse stock split, which was intended to boost the shares above $1 and prevent the Nasdaq Stock Market from delisting the stock. Before the reverse split, the shares traded at 7 cents.
After the reverse split, Quokka shares were initially valued at $3.50. But at the close of trading Monday, they had plunged by more than 50 percent. They continued their sharp descent during the following two days, closing Wednesday at 41 cents.
The shriveling stock price and lack of a buyer were the final straw, sources said. Wednesday's layoffs were first reported by The Industry Standard.
Quokka had been hustling to find a buyer before a May 1 deadline that would annul its agreements with NBC. Key to those deals was the coveted right to produce Web coverage for the 2002 Olympics in Salt Lake City.
While looking for a buyer, the company was mulling several cost- and debt-management options, which included additional layoffs and bankruptcy protection. Quokka had completed two rounds of layoffs since November, when it cut 90 positions, or 20 percent, of its staff. Earlier this year, it dismissed 217 employees, or 59 percent, of its work force.