Egghead Software

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Egghead, Inc.
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FateBankruptcy; Domain name acquired by Amazon.com
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HeadquartersSpokane, Washington, U.S.
ProductsComputer software
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Employee coffee cup, c. 1988

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

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. In May 1996, Egghead sold its Corporate, Government & Education division to Software Spectrum for $45 million.[9][10][11] At that time, the stock price was $6 per share and there was speculation of a takeover of the company.[12]

In February 1997, the company announced it would close 77 of its 156 stores and reported additional losses. In May 1997, the company acquired competitor Surplus Software Inc. for $31.5 million.[13]

In January 1998, the company reported a loss and announced it would close all 80 of its remaining stores, lay off 600 of its 800 employees, and sell only through its website, Egghead.com. Its stock price fell 18% on the news.[14][7][1]

In July 1998, during the dot-com bubble, shares soared 175% in a couple weeks.[15]

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.[16][17]

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.[18][19] 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.[20][21] Many credit cards were cancelled.[22] The company later discovered that credit card information was not obtained.[23]

In August 2001, the company filed bankruptcy and worked out a deal to be acquired by Fry's Electronics.[24] 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.[25]

References

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  1. ^ a b Page Module:Citation/CS1/styles.css has no content.Emert, Carol (January 29, 1998). "Egghead Will Close Its 80 Stores". San Francisco Chronicle.
  2. ^ Page Module:Citation/CS1/styles.css has no content."Step Up Your System!". InfoWorld. April 5, 1993.
  3. ^ Page Module:Citation/CS1/styles.css has no content.Zielenziger, Michael (June 8, 1987). "'EGGHEAD' SOFTWARE CHAIN IS SCRAMBLING TO THE TOP". The Washington Post.
  4. ^ Page Module:Citation/CS1/styles.css has no content.Lalonde, James E. (August 20, 1989). "EGGHEAD EXECS SUBPOENAED IN FRAUD PROBE". Chicago Tribune.
  5. ^ Page Module:Citation/CS1/styles.css has no content.Johnston, Stuart J. (December 4, 1989). "Egghead Software to Close 20 Retail Stores". InfoWorld.
  6. ^ Page Module:Citation/CS1/styles.css has no content."Egghead Software to introduce first product". United Press International. June 23, 1993.
  7. ^ a b Page Module:Citation/CS1/styles.css has no content."Egghead Closing All Retail Stores". The New York Times. Associated Press. January 29, 1998.
  8. ^ Page Module:Citation/CS1/styles.css has no content.Chen, Raymond (August 24, 2005). "Buying an entire Egghead Software store". Microsoft.
  9. ^ Page Module:Citation/CS1/styles.css has no content."company news software spectrum plans to buy egghead division". The New York Times. Dow Jones & Company. March 26, 1996.
  10. ^ Page Module:Citation/CS1/styles.css has no content.Carney, Dan (August 11, 1996). "Software Spectrum absorbs Egghead fed biz, aims for larger market". Federal Computer Week. Archived from the original on July 13, 2020. Retrieved July 12, 2020.
  11. ^ Page Module:Citation/CS1/styles.css has no content."Egghead, Inc. Form 10-Q Quarterly Report for the Second Quarter of 1996". U.S. Securities and Exchange Commission.
  12. ^ Page Module:Citation/CS1/styles.css has no content.Murphey, Michael (September 22, 1996). "Egghead Fights For Survival Shrinking Software Company Faces The Possibility Of A Takeover Attempt". The Spokesman-Review.
  13. ^ Page Module:Citation/CS1/styles.css has no content.Jones, Grayden (May 2, 1997). "Egghead To Acquire Competitor Spokane-Based Company Buying Surplus Software In Deal Worth $31.5 Million". The Spokesman-Review.
  14. ^ Page Module:Citation/CS1/styles.css has no content."Egghead to Close All Stores To Focus on Net Commerce". The Wall Street Journal. January 28, 1998.
  15. ^ Page Module:Citation/CS1/styles.css has no content."Egghead.com surges 25 percent in heavy trading 7-10-98". MarketWatch. July 10, 1998.
  16. ^ Page Module:Citation/CS1/styles.css has no content."Egghead, Onsale complete merger". CNET. November 22, 1999.
  17. ^ Page Module:Citation/CS1/styles.css has no content.Anders, George (July 15, 1999). "Egghead.com and Onsale Announce A $375 Million Merger Agreement". The Wall Street Journal.
  18. ^ Page Module:Citation/CS1/styles.css has no content.Lemos, Robert (December 22, 2000). "Egghead cracked; data at risk". ZDNet.
  19. ^ Page Module:Citation/CS1/styles.css has no content.HARRIS, RON (December 22, 2000). "Online Retailer Egghead.com Hacked". Associated Press.
  20. ^ Page Module:Citation/CS1/styles.css has no content.Greene, Thomas C. (April 27, 2001). "Egghead credit card hack: serious questions remain". The Register.
  21. ^ Page Module:Citation/CS1/styles.css has no content.Lemos, Robert (January 2, 2001). "Egghead silent; customers angry". CNET.
  22. ^ Page Module:Citation/CS1/styles.css has no content.Kirby, Carrie (January 11, 2001). "Fallout Remains From Egghead.com Hacking / Some credit cards canceled due to breach". San Francisco Chronicle.
  23. ^ Page Module:Citation/CS1/styles.css has no content.Lemos, Robert (January 9, 2001). "Lengthy Egghead investigation costs banks millions". CNET.
  24. ^ Page Module:Citation/CS1/styles.css has no content."Egghead files for Chapter 11 bankruptcy". ZDNet. August 15, 2001.
  25. ^ Page Module:Citation/CS1/styles.css has no content.DiSabatino, Jennifer (December 5, 2001). "Amazon buys Egghead.com". Computerworld.

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