Egghead Software

Egghead Software was a computer software retailer. Founded in 1984, it filed bankruptcy in 2001 and its domain name was acquired by Amazon.com.

Egghead, Inc.
IndustryRetail
FateBankruptcy; Domain name acquired by Amazon.com
Founded1984 (1984)
FounderVictor D. Alhadeff
DefunctDecember 2001 (2001-12)
HeadquartersSpokane
ProductsComputer software
Employee coffee cup, circa 1988

History

The company was founded by Victor D. Alhadeff in 1984, as a single store in Bellevue, Washington.[1]

Customers were able to sign up for a "CUE" card ("Customer Updates and 'Eggs'tras") that would provide discounts.[2]

By June 1987, when Alhadeff was 40 years old, the company had 50 stores on the West Coast of the United States.[3]

In June 1988, the company became a public company via an initial public offering. Within a year, the stock price dropped from $17 per share to $11 per share and top executives, including the founder, were sued for fraud for failing to disclose material facts about the true condition of the company`s inventory systems and finances.[4]

By December 1989, the company had 206 stores, but closed 20 of them due to losses and inventory issues and theft.[5]

In June 1993, the company released its first software product, Egghead Express, which allowed customers to place and manage orders.[6]

In 1995, the company moved its headquarters from Issaquah, Washington, east of Seattle, to Spokane. At that time it had 2,500 employees and operated retail stores in 30 states.[7]

Also in 1995, when the development manager of Windows 95 wanted to test compatibility, he bought a copy of every program for sale at an Egghead store.[8]

In 1996, George Orban became chairman and in January 1997, he became CEO.[9]

In May 1996, Egghead sold its Corporate, Government & Education division to Software Spectrum for $45 million.[10][11][12] At that time, the stock price was $6 per share and there was speculation of a takeover of the company.[13]

In February 1997, the company announced it would close 77 of its 156 stores and reported additional losses.[14]

In May 1997, the company acquired competitor Surplus Software Inc. for $31.5 million.[15]

In January 1998, the company reported a loss and announced it will close all 80 of its remaining stores, layoff 600 of its 800 employees, and sell only through its website, Egghead.com. Its stock price fell 18% on the news.[16][7][1]

In July 1998, during the dot-com bubble, shares soared to $25 as investors bought up shares of internet companies.[17]

In 1999, the company merged with OnSale.com in a $375 million all-stock transaction. The company kept the Egghead.com name and the CEO of Onsale, Jerry Kaplan, became CEO of the combined company.[18][19][20]

In December 2000, right before Christmas, the company's servers were compromised, and it feared that the credit card data of over 3.7 million people was stolen.[21][22] The company first publicly denied that there was a problem, then notified Visa Inc., which notified banks, who notified consumers, causing the breach to escalate into a full blown scandal.[23][24] Many credit cards were cancelled.[25] The company later discovered that credit card information was not obtained.[26]

In August 2001, the company filed bankruptcy and worked out a deal to be acquired by Fry's Electronics.[27] However, the deal fell apart after Fry's accused Egghead of failing to provide financial documents, and in December 2001, the company sold its domain name to Amazon.com.[28]

References
  1. Emert, Carol (January 29, 1998). "Egghead Will Close Its 80 Stores". San Francisco Chronicle.
  2. "Step Up Your System!". InfoWorld. April 5, 1993.
  3. Zielenziger, Michael (June 8, 1987). "'EGGHEAD' SOFTWARE CHAIN IS SCRAMBLING TO THE TOP". The Washington Post.
  4. Lalonde, James E. (August 20, 1989). "EGGHEAD EXECS SUBPOENAED IN FRAUD PROBE". Chicago Tribune.
  5. Johnston, Stuart J. (December 4, 1989). "Egghead Software to Close 20 Retail Stores". InfoWorld.
  6. "Egghead Software to introduce first product". United Press International. June 23, 1993.
  7. "Egghead Closing All Retail Stores". The New York Times. Associated Press. January 29, 1998.
  8. Chen, Raymond (August 24, 2005). "Buying an entire Egghead Software store". Microsoft.
  9. "George P. Orban – Egghead.com Inc (eggs)". TWST. December 28, 1998.
  10. "company news software spectrum plans to buy egghead division". The New York Times. Dow Jones & Company. March 26, 1996.
  11. Carney, Dan (August 11, 1996). "Software Spectrum absorbs Egghead fed biz, aims for larger market". Federal Computer Week.
  12. "Egghead, Inc. Form 10-Q Quarterly Report for the Second Quarter of 1996". U.S. Securities and Exchange Commission.
  13. Murphey, Michael (September 22, 1996). "Egghead Fights For Survival Shrinking Software Company Faces The Possibility Of A Takeover Attempt". The Spokesman-Review.
  14. "Egghead closes stores locally, nationally". Colorado Springs Business Journal. February 7, 1997.
  15. Jones, Grayden (May 2, 1997). "Egghead To Acquire Competitor Spokane-Based Company Buying Surplus Software In Deal Worth $31.5 Million". The Spokesman-Review.
  16. "Egghead to Close All Stores To Focus on Net Commerce". The Wall Street Journal. January 28, 1998.
  17. "CNNfn market movers". CNN. July 13, 1998.
  18. "Egghead, Onsale complete merger". CNET.
  19. Anders, George (July 15, 1999). "Egghead.com and Onsale Announce A $375 Million Merger Agreement". The Wall Street Journal.
  20. "Egghead, Onsale merge". CNN. July 14, 1999.
  21. Lemos, Robert (December 22, 2000). "Egghead cracked; data at risk". ZDNet.
  22. HARRIS, RON (December 22, 2000). "Online Retailer Egghead.com Hacked". Associated Press.
  23. Greene, Thomas C. (April 27, 2001). "Egghead credit card hack: serious questions remain". The Register.
  24. Lemos, Robert. "Egghead silent; customers angry". CNET.
  25. Kirby, Carrie (January 11, 2001). "Fallout Remains From Egghead.com Hacking / Some credit cards canceled due to breach". San Francisco Chronicle.
  26. Lemos, Robert. "Lengthy Egghead investigation costs banks millions". CNET.
  27. "Egghead files for Chapter 11 bankruptcy". ZDNet. August 15, 2001.
  28. DiSabatino, Jennifer (December 5, 2001). "Amazon buys Egghead.com". Computerworld.
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