CDNow Says Feb. Traffic Up - But Is It Too Late?
Amid doubts that CDNow can survive, the financially-troubled online music retailer today reported that the site attracted a record number of visitors last month and was the fifth largest shopping site.
Citing figures from Media Metrix, CDNow says visits rose 23 percent in February over the previous month, with 8 percent of all Web users visiting the site. CDNow was the only music site in the top 10. In a news release, CDNow recalled PCData's previously-released February list that shows it exceeded the 1 million transactions mark and outdid Amazon in visits with 13.3 million.
But all that has little to do with the bottom line. A bombshell that echoed through the investment community had CDNow's accountants expressing "substantial doubt" for the company's chances of survival. In its annual report filed Tuesday with the Securities and Exchange Commission, CDNow said it believes its current cash and equivalents are sufficient to meet obligations until about Sep. 30.
The news sent CDNow shares plummeting more than 30 percent Wednesday, losing $1.56 to close at an all-time low of $3.50. This afternoon shares were up a quarter-point (+7.14 percent) at 3 3/4.
CDNow President and CEO James Olim used today's statement about visitor gains to address the company's dismal financial picture. "Furthermore, following Sony and Time Warner's recent investment into CDNow, we put in place an operating plan to significantly reduce our cash burn rate. We intend to leverage our leadership position in music retail, music content, digital downloading and custom CDs, along with our strong relationships with our audience and our partners, to create value for CDNow's investors."
The Sony-Time Warner investment of $21 million on March 13 followed a decision to abandon plans for the companies' Columbia House to merge with CDNow due to concerns about CDNow's $30 million debt.
CDNow can be found on the Web at http://www.cdnow.com
Reported by Newsbytes.com, http://www.newsbytes.com