Webvan drifts lower following downgrade, policy change

Online grocer Webvan shed 25 cents, or 15 percent, to $1.44 Wednesday after it absorbed a downgrade from Merrill Lynch and announced it will begin charging a delivery fee for orders under $75.

Webvan (Nasdaq: WBVN) posted a wider-than-expected loss in its third quarter, dropping $148 million, or 40 cents a share, including charges, on sales of $54 million.

Excluding the one-time charges, it lost 26 cents a share.

Webvan shares fell to an all-time low of 88 cents a share in October and is still reeling from the resignation of founder and chairman Louis Borders.

On Wednesday, Merrill Lynch analyst Henry Blodget downgraded Webvan from a long-term "accumulate" rating to a long-term "neutral" recommendation.

Webvan officials simultaneously announced that it will begin charging the fee on orders placed on or after Nov. 13. Orders of more than $75 will continue to receive free delivery.

Webvan shares raced up to a 52-week high of $31.38 in December.

Analysts are expecting it to lose 26 cents a share in its fourth quarter.

Among online grocery competitors, Homegrocer.com (Nasdaq: HOMG) moved up 19 cents to $4.19 and Peapod (Nasdaq: PPOD) was off 6 cents to $1.81.