Chinese e-commerce giant Alibaba.com has one less competitor to worry about as Ninetowns Internet Technology Group Company Limited is terminating its own B2B online sourcing website Tootoo.com.
"We carefully assessed the long-term impact of continuing our B2B business and have determined that the time and investment required for further support is not in the best interests of the company or its shareholders given the uncertain global economic environment," stated Shuang Wang, Ninetowns' CEO.
Ninetowns says the discontinuation of the B2B business is not expected to have a material financial impact on Ninetowns' other business solutions. As a result of this decision, Ninetowns expects to record a one-time non- cash impairment charge of approximately CNY115 million against its long-lived assets and goodwill. Ninetowns is now in the process of finalizing the impairment charge with its advisors, including an independent third-party valuation specialist. Ninetowns does not expect the non-cash impairment charge to have an adverse impact on its current cash position, current cash flows from operating activities, or future cash expenditures.
If there is no expected impact on the company's current cash flows, this begs the question of whether Tootoo.com ever created any revenue for Ninetowns. Obviously whatever meager revenue Tootoo.com managed to scrape together was not enough to keep it afloat.
Tootoo.com was originally developed as a B2B search and service provider for suppliers and buyers engaged in international trade and was not fully commercialized as of the end of 2008. Ninetowns expects to begin winding down all services and support for Tootoo.com within approximately 60 days and plans to eventually discontinue Tootoo.com's B2B service offering. Ninetowns intends to re-assign existing Tootoo.com personnel consisting of approximately 50 employees to other functions within Ninetowns.
