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CDNow faces Cash Crash

Arthur Andersen expresses big doubts

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CDNow's auditors say there is a "substantial doubt" about the online retailer's ability to "continue as a going concern". Arthur Andersen's warning, contained in a CDNow filing on Tuesday, says the company had suffered "recurring losses from operations, ahd a working capital deficiency and significant payments were due in 2000 related to marketing deals", the FT reports. But FT columnist Lex says the company's position "may not be as dire as all that". CDNow had sales from one million customers last month, it has reduced its cash burn rate to $15 million a quarter. And it still has access to $40 million. CDNow investors may not be so confident: yesterday shares fell $1 9/16 to $3 1/2. At its peak last year, CDNow stock traded at $23 1/4. ® Related Story Dotcoms deny they are running out of cash

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