Buy.com News Briefs:
Trouble Hits Another Dot-Com

(MARCH 1, 2001) - Buy.com, the Internet-based retailer, Feb. 28 announced it has filed suit against the PGA Tour seeking more than $45 million in damages, which the company asserts were caused by the PGA Tour's breach of its sponsorship agreement with Buy.com, the official sponsor of the Buy.com Tour.

The complaint alleges that the Tour breached the sponsorship agreement by entering into a relationship with USA Networks to be the exclusive operator of PGA Tour's official online store, the PGA Tour Shop. Further, the complaint alleges that the Tour never approached Buy.com about the opportunity it provided to USA Networks, as required by the sponsorship agreement, failing to integrate Buy.com into its long-term general Internet strategy.

In a news release, the Aliso Viejo, Calif. company "expressed shock and disappointment over the PGA Tour's announcement on Feb. 14, 2001 that it had entered a new e-commerce relationship with USA Networks as the PGA Tour's agreements require them to engage in good faith and exclusive negotiations with Buy.com regarding each electronic commerce opportunity that might produce mutual benefit."

The PGA Tour selected USA Networks, in great part, because the New York-based company will use its various business entities to cross-promote Tour merchandise and steer traffic to pgatour.com, said Ed Moorhouse, the Tour's executive vice president and chief legal officer.

The deal calls for Styleclick, a USA Networks company, to rebuild PGA Tour Shop, the online retail store at pgatour.com and for Electronic Commerce Solutions, another subsidiary, to stock inventory for PGA Tour Shop online and fulfill orders from customers.

Buy.com (Nasdaq: BUYX) also has taken legal steps to rescind its five-year sponsorship agreement with the Tour, which was originally signed in October 1999.

The company said that since the consummation of the Tour's contract with USA Networks, it has had several discussions with the Tour to find a solution to this dispute. However, according to the news release, "The PGA Tour no longer appeared to be interested in supporting its sponsor and the only course of action left for the company was to pursue legal recourse to protect the interests of its constituents."

The suit was filed in the U.S. District Court in the Central District of California.

The PGA Tour is expected to release a statement on the lawsuit late afternoon, Feb. 28.

In other news from Buy.com

Buy.com Feb. 28 announced a restructuring plan that, among other changes, includes removing itself from golf e-commerce.

Designed to reduce cash operating expenses by eliminating approximately 125 jobs from the company's Aliso Viejo, Calif. headquarters, the restructuring will also significantly reduce expenses related to certain outsourced services. According to company officials, these steps are intended to reduce the company's cash expenses by approximately $29 million on an annual basis and, when coupled with actions already underway, will purportedly reduce the company's total annual operating expenses by $70 million.

The restructuring plan also includes exiting the golf business acquired from buygolf.com and closing the company's sports store.

Buy.com (Nasdaq:BUYX) expects to record a pre-tax charge in the range of $32 million to $37 million in the first quarter 2001 associated with its restructuring plan and the reduction in workforce.

"We had to make difficult decisions in order to advance our goal of becoming profitable while maintaining a leadership position in e-commerce. To that end, we have identified areas within our operating structure where we are able to streamline our business and reduce our cash operating expenses," said James B. Roszak, Buy.com's chief executive officer.

Roszak became interim CEO two weeks ago after the resignations of Gregory Hawkins, who was chairman and CEO, and of chief financial officer Mitch Hill.