CDNOW GETS ITS "SLIM" CHANCE, WHICH IS BETTER THAN NONE
In Beleagured Online Retailer
According to a filing with the SEC, Slim bought 3.03 million shares, a 9.2% stake, in the troubled online music retailer for $52.8 million. He paid an average of $17.43 per share for his stake. Ay caramba, that's a lot of chalupas. Over the last two months, Slim bought 50,000 shares at prices between $3.83 and $8.27 per share. His business empire includes Mexico's Inbursa financial group and phone giant Telefonos de Mexico. He denied the song, "The Real Slim Shady," is about him.
CDNow, whose shares have fallen 90 percent from their high of $39.25, had been looking for a partner since its proposed merger with Columbia House fell through earlier this year because of its shaky finances. Columbia House, jointly owned by Time Warner and Sony, instead opted to invest up to $51 million in the e-company.
CDnow founder and CEO jason olim',390,400);">jason olim',390,400);">Jason Olim told The New York Post that more than a dozen companies had expressed interest in investing in the company. The new deal could not come at a better time for the music e-tailer, which by all accounts (except for its own) is on the brink of collapse.
Two weeks ago, the Fort Washington, PA-based company's auditor expressed "substantial doubt" about CDnow's ability to stay in business, with just $28.7 million left on its balance sheet. Olim insistedthere was enough cash on hand for the online retailer to last through the second quarter.
Before Slim came on board, Olim said the company's strategy was to cut marketing spending and reduce operating expenses by more than $12 million a quarter. The SEC filing said Slim was engaged in discussions with CDNow regarding an additional investment, though the amount and timetable "[had not yet been] determined."
If all goes as planned, Olim asserted, the company will reach profitability in the fourth quarter of 2002.
