CompuSave Expected to Get Stopgap Funds
CompuSave Inc. of Irvine, the struggling high-tech retailer hose work force has been slashed in half over the last six months, is expected to announce today that it has secured a $1-million cash infusion to tide it over until yet more financing can be arranged.
“It will give the company enough money to operate on for a while,” said a spokesman. “It gives them a breathing space.”
However, the spokesman said CompuSave’s financial problems have forced it to lay off all but about 85 employees, more than 40 of them within the last week.
CompuSave’s problems, which include losses of more than $7 million in the last 15 months, have depleted virtually all of the $9.6 million the company raised in two stock offerings and have sent its officials looking for additional investments.
Company officials have blamed their problems in large part on the difficulty and high cost of introducing electronic retailing to the public.
CompuSave’s novel “discount shopping machine,” which resembles a refrigerator with a built-in talking television screen, allows shoppers to order from an inventory of 2,500 discounted items by simply pressing its touch-sensitive screen and inserting a credit card. Delivery is guaranteed by mail.
So far, CompuSave has sold and installed about 425 Touch-n-Save machines in supermarkets and convenience food stores across the nation. But sales from the machines have been lower than the company initially projected, in part, the company says, because of customer uncertainity about shopping by machine.
CompuSave officials have also said their operations and efforts to secure financing for the company have been hurt by an alleged smear campaign of anonymous letters to newspapers, stock brokers and the Securities and Exchange Commission.
The company has claimed that the campaign is the work of a group or individual trying to depress the price of the stock to benefit short sellers--investors who have bet on a price drop. In late October, after 200 letters highly critical of CompuSave’s operations were sent to Wall Street brokerages, the company’s stock lost nearly 25% of its value in a single day.
However, the man who claims he conducted the two-month letter-writing effort said Monday that he acted alone and was not part of a stock manipulation scheme. The man refused to be identified, claiming, among other things, a fear of being sued by CompuSave.
‘Whistle Blower’
The letter-writer, a former CompuSave employee, described himself as a “whistle blower.”
Officials from CompuSave declined Monday to respond to the former employee’s claims. But the company’s public relations adviser, Richard Lewis, questioned the letter writer’s claim that he has been trying to protect CompuSave’s stockholders.
Noting that the company’s stock has plunged during the letter-writing campaign, Lewis said: “This person is only hurting the investor. How can he claim to be a champion of the investor?”
The letter writer said he initially wrote to newspapers, signing some of the letters as “A Seeker of Truth and Fair Play,” in an effort to entice them to take a hard look at the company’s operations.
When that strategy didn’t pan out, he said, he wrote an anonymous letter to the Security and Exchange Commission in Washington and then mailed documents and letters to 200 stockbrokers and analysts.
SEC officials have refused to comment on the matter.
