When Pets.com (IPET) acquired some of Petstore.com (dossier)'s assets last week, headline writers went to town with the dog metaphors. Of course, "dog eat dog" was among the favorites. But "dog eat dead dog" would have been more appropriate. The deal wasn't a merger or acquisition. Petstore expired, and Pets.com scavenged its assets at fire-sale prices.

The pets deal came a day after Hollywood Entertainment (HLYW) shut down its e-commerce arm, Reel.com (dossier). While content from Reel will endure, and superstore Buy.com will fulfill orders for videos, Reel went out of business, closing its operations and laying off its 200 workers. (Coincidentally, the two failed companies were in the San Francisco Bay hamlet of Emeryville.)

These closures are among the most significant yet in the imploding e-commerce world. In sheer scale, they are on par with the most visible blowout to date - that of Boo.com, the London-based apparel retailer. Boo burned through $135 million in investor money. By comparison, Petstore.com had raised a staggering $150 million, though some of that was in promotional agreements with lead investor Discovery Communications (dossier).

For its part, Reel.com was valued at a cool $100 million when it was acquired by Hollywood Entertainment in 1998; the company has since invested tens of millions more and will spend an additional $25 million to shut it down. What's more, Reel's red ink has dragged down Hollywood Entertainment shares by 75 percent, erasing hundreds of millions of dollars in market value.

So what's left when these well-funded dot-com's crash? Not much.

Petstore.com managed to sell off some of its assets, most important its customer list and relationships with Discovery Communications and Safeway (SWY). But it got a mere $13 million in Pets.com's depressed shares. The company may still liquidate other assets, such as inventory and equipment, but that's not likely to amount to much.

Petstore.com officials didn't respond to requests for comment. Execs at Discovery tried to put a positive spin on the deal. "We still believe in the pet space," says Jackie Chorney, VP and general manager of Discovery.com. "We feel a merger with Pets.com made a lot of sense."

Chorney refuses to disclose the full size of Discovery's investment in Petstore or its current stake in Pets.com. Bob Barrett, whose Battery Ventures led Petstore's first VC round with $9 million, is less cheery than Chorney. "I'm not satisfied," Barrett says.

Reel's parent, Hollywood Entertainment, will get some marginal revenue from Reel and will continue to use its content. Hollywood Entertainment officials decline to comment on the value of the remaining Reel assets. But Buy.com CEO Greg Hawkins says his company agreed to pay Hollywood about $15 per new customer referred by Reel.com.

Unlike other businesses, failed consumer e-commerce sites have few assets, since they tend to spend most of their money building a brand and acquiring customers. "Even in the software business, there's residual code that's left that can be integrated with other software or residual revenue streams from maintenance and upgrades," says Stephen O'Leary, a managing director at financial services firm Broadview International. "You don't have that here. These were the ultimate in shallow business models."

Sectors such as home furnishings, toys, gifts, computers and consumer electronics loom as the next casualties. O'Leary says several dot-coms have sought Broadview's help to secure more financing or acquisition partners. But Broadview is staying away from most of the money losing retailers. "We have a word," O'Leary says. "We call them radioactive."

Not Much to Show for Their Money

E-commerce companies spend most of their dollars building their brands. When they go belly up, there isn't much left.

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SOURCE: COMPANIES LISTED