Another indignity for 2 failed ghosts of dot-com..

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[b]Another indignity for 2 failed ghosts of dot-com era[/b]
[i]SAN FRANCISCO--They were once among the Internet highflyers, but investors have not heard much lately from DrKoop.com and the Webvan Group.[/i]

[size=1]By Gary Rivlin[/size]

Neither has the U.S. Securities and Exchange Commission, which suspended trading in the two stocks Wednesday, because the companies are late with their quarterly filings. Nearly three years late, as it turns out.

The agency has had no communication from DrKoop since December 2001, or from Webvan since February 2002. That might be because both companies ceased operations in 2001, and there is evidently no one left to fill out the requisite paperwork.

The news that the SEC had only now caught up with two of the dot-com era's more spectacular flameouts elicited mainly wisecracks and snickers in Silicon Valley.

"DrKoop--I thought the good doctor was euthanized years ago," said Paul Saffo, a fellow at the Institute for the Future, a research group in Menlo Park, Calif.

Actually, both Webvan and DrKoop.com do still exist, if only as placeholders for subsequent companies that might seek a quick way to go public on the cheap.

"These companies survive as shells, because sometimes they’re acquired for reverse mergers," said Hulus Alpay, chief of investor relations at Makovsky & Company, an investor relations and public relations company. "They keep that pulse going on the hope there will be this acquirer who'll come in and strip away some of its nastier parts, like debts and lawsuits, and they'll be able to buy this shell of a public company that can be revived for not very much money."

Neither Webvan nor DrKoop.com would be very expensive if a buyer were shopping. Shares in Webvan, which topped out at $34 the day the company went public in November 1999, were worth two one-hundredths of a penny at Wednesday's close, on a volume of 165 shares.

DrKoop, which reached $32.65 a share a month after coming to market in June 1999, ended trading unchanged Wednesday, trading at nine one-hundredths of a penny, with 1,300 shares changing hands.

At its peak, DrKoop, a consumer health Web site started in 1997 by the former Surgeon General C. Everett Koop, was valued at more than $1 billion. The company shut its doors in December 2001, and the DrKoop.com domain was purchased for $186,000 by Vitacost.com. It was then purchased this summer by Choice Media for an undisclosed amount, said Ash Nashed, the chief executive of Choice Media.

If anything, the rise and fall of Webvan, an online grocery delivery company also founded in 1997, was even more spectacular. A who's who of investors sunk hundreds of millions of dollars into Webvan before its initial public offering in November 1999. That includes two of Silicon Valley's best-known venture capital firms: Sequoia Capital ($53.5 million) and Benchmark Capital ($3 million) and the investment bank Goldman Sachs ($125 million). All told, the company burned through $1.2 billion in cash.

Webvan announced in July 2001 that it was shutting down its operations and seeking bankruptcy protection. It is unclear, even to the SEC, who is keeping the Webvan embers alive.

In all, the SEC suspended trading in 24 other penny stocks Wednesday--obscure companies without dot-com notoriety. All 26 companies were granted two weeks to file the proper paperwork or risk having their stocks delisted, in which case any broker would be violating SEC rules to continue trading them.

The SEC declined to comment on why it was only now taking action, other than to issue a written statement from Larry West, an official in its division of enforcement. "When companies fail to make their filings, investors can get hurt," the statement read. Matthew B. Swartz, a partner at Venable, a law firm based in Washington, conjectured that Wednesday's SEC action was mostly a clerical matter. "I have to believe this is an administrative snafu by somebody," Swartz said.

In Silicon Valley, not everyone saw humor in the posthumous punishment of the dot-com zombies. "That was a big fat pie in the face for us," said an early investor in Webvan. "I don't think you'll be getting anyone around here to talk for the record about one of our bigger goose eggs."

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