Overstock.com

Infobox_Company
company_name = Overstock.com
company_
company_type = Public (nasdaq|OSTK)
company_slogan = Your online outlet!
foundation = 1997
location_city = Cottonwood Heights, Utah
location_country = USA
key_people = Patrick Byrne, CEO
num_employees =
industry = Retail
revenue = $760 Million (2007) [http://finance.yahoo.com/q/is?s=OSTK&annual]
net_income =
products = Overstock.com | homepage = [http://www.overstock.com www.overstock.com]

Overstock.com (nasdaq|OSTK) is an online retailer headquartered in Cottonwood Heights, Utah, near Salt Lake City. Founded in 1997, by Robert Brazell [ [http://www.ibnads.com/in/management.php "Robert Brazell", bio bit] ] , it pioneered the online sale of surplus merchandise, and now features a combination of surplus, returned, and new items.

Overstock.com was founded in 1997 under the name D2: Discounts Direct, and changed its name to Overstock.com in 1999. The company began selling surplus and returned merchandise on an online E-commerce marketplace, buying the surplus inventory of at least 18 failed dot-com companies at below-wholesale prices. In recent years it has expanded to sell new merchandise. [cite web|url=http://finance.yahoo.com/q/bc?s=OSTK&t=5y|title=Five-year stock price|work=Yahoo! Finance|date=2008-03-20|accessdate=2008-03-21] [cite news|url=http://www.deseretnews.com/article/1,5143,695195939,00.html|work=Deseret Morning News|title=Heights of livability in Utah?|accessdate=2008-03-22|first=Amelia|last=Nielson-Stowell] [cite news|url=http://select.nytimes.com/2007/03/10/business/10nocera.html|title=Revisiting Utah and Overstock|work=The New York Times|date=2007-03-10|accessdate=2008-03-22|first=Joe|last=Nocera] [cite news|url=http://finance.google.com/finance?fstype=ii&q=OSTK|title=Financial Statements for Overstock.com, Inc.|date=2008-03-20|accessdate=2008-03-22|work=Google Finance] cite web|url=http://findarticles.com/p/articles/mi_gx5202/is_2004/ai_n19123428|title=International Directory of Company Histories, Volume 75 (2004)|date=2004-01-01|accessdate=2008-03-22|first=Jeffrey|last=Covell|work=FindArticles.com] [cite news|url=http://www.wired.com/techbiz/media/news/2001/11/48189|title=Where the Dot-Dead Wind Up|work=Wired News|first=Joanna|last=Glasner|date=2001-11-12|accessdate=2008-03-22]

Overstock went public in May, 2002 at an IPO price of $13. After achieving significant growth and profits in some early quarters, the company's stock traded as high as $77, but following recent losses the company has traded as low as single digits. [cite news|url=http://findarticles.com/p/articles/mi_m0EIN/is_2002_Oct_28/ai_93478764|title=Overstock Results 3Q 2002: Operating Profits on 172% Sales Growth|work=Business Wire|date=2002-10-28|accessdate=2008-03-22] Its major rivals are thought to be Amazon.com and eBay. [cite news|url=http://www.businessweek.com/technology/content/apr2005/tc20050427_3567_tc024.htm|title=Amazon: Revenue River, Profit Trickle|author=Hof, Robert D|work=Business Week|date=2005-04-27|accessdate=2008-03-22] [cite news|url=http://news.cnet.co.uk/software/0,39029694,39190324,00.htm|title=eBay gets an earful from sellers|date=2005-06-07|accessdate=2008-03-22|work=CNET News|first=Elinor|last=Mills]

Business model

Part of Overstock.com's merchandise is purchased by or manufactured specifically for Overstock.com. Among their products are handmade goods produced for Overstock by workers in "developing nations." [cite news|url=http://www.wired.com/techbiz/media/news/2004/06/63932|work=Wired News|title=Overstocking in Afghanistan|date=2004-06-25|accessdate=2008-03-22|first=Joanna|last=Glasner] [cite news|url=http://investors.overstock.com/phoenix.zhtml?c=131091&p=irol-newsArticle&ID=834913|title=Overstock.com Celebrates One-Year Anniversary of Worldstock, Its Socially Responsible Goods Department|work=Overstock.com|publisher=Business Wire|first=Leslie|last=Dotson] The company also manages the inventory supply for other retailers.

In addition to its direct retail sales, Overstock.com has also offered online auctions on its website since September 24, 2004.

After initially relying solely on word-of-mouth marketing from customers, the company turned to distinctive television advertisements starring German actress Sabine Ehrenfeld. [cite news|url=http://www.slate.com/id/2114128/|work=Slate (magazine)|title=What's With That Overstock.com Ad?|date=2005-02-28|accessdate=2008-03-22|first=Seth|last=Stevenson] [cite news|url=http://www.foxnews.com/story/0,2933,138216,00.html|title=Oh! Oh! Oh ... It's Another 'Sally' Ad|date=2004-11-13|accessdate=2008-03-22|first=Jennifer|last=D'Angelo|work=FOX News Channel] Newer advertisements feature Briana Walker. [cite news|url=http://www.overstock.com/cgi-bin/d2.cgi?PAGE=STATICPOPUPFULL&STA_ID=13200|title=National TV Commercial: New Spokeswoman, Briana Walker - Live Better with Overstock.com|first=Briana|last=Walker|work=Overstock.com]

Since 1999, when Byrne took control and relaunched the company as Overstock the company has never achieved an annual profit, losing $240 million. Byrne projected in May 2008 that Overstock would be profitable in the fourth quarter of 2008, and would achieve a $10 million profit. [Interview with Reuters news agency, May 9, 2008, http://www.reuters.com/article/ousiv/idUSN0843196920080509, accessed May 9, 2008]

Naked short selling campaign

The company has received attention stemming from CEO Patrick Byrne's battle against alleged naked short selling of his company's shares. Beginning in 2005, Byrne has contended that a number of companies, including Overstock.com, have been the targets of this practice, which involves selling a stock short but without the usual step of initially borrowing or locating the shares. Byrne alleges that the practice circumvents safeguards of conventional shorting, and has been used in large schemes devised to profit from driving down the prices of companies' shares, in many cases leading to these companies' failure. With Overstock, Byrne contends that the company's longstanding appearance on the Regulation SHO Threshold Security list, an SEC-mandated list showing companies with a high number of "fails to deliver," along with high trading volumes that sometimes surpass 100% of the company's stock, establish that it has been targeted by this practice. [cite news|url=http://www.reuters.com/article/pressRelease/idUS189862+27-Dec-2007+PRN20071227|first=Kirstie|last=Burden|title=Overstock Reappears on the Regulation SHO Threshold List|publisher=Reuters|date=2007-12-27|accessdate=2008-03-22|work=PR Newswire] As of December 26, 2007, there were 4.92 million shares sold short, which is 30.2% of float.cite news|url=http://finance.yahoo.com/q/ks?s=OSTK|title=OSTK: Key Statistics for OVERSTOCK.COM INC - Yahoo! Finance|accessdate=2008-03-22|work=Yahoo! Finance]

Byrne's campaign has been controversial, including criticism in the financial press that Byrne is seeking to divert attention from Overstock's share price declines and failure to turn a profit.cite news|first=Susan|last=Antilla|url=http://www.bloomberg.com/apps/news?pid=20601039&sid=aLDKLcXDf9PU&refer=columnist_antilla|title=Overstock Blames with Creepy Strategy|date=2007-02-21|accessdate=2008-03-22|work=Bloomberg L.P.] New York Times columnist Joseph Nocera has said in 2006 that, "Except for a few fellow-traveling Web sites, where Mr. Byrne is viewed as a heroic figure, most people who understand the issue or have looked into it think it's pretty bogus."cite news|url=http://select.nytimes.com/2006/06/10/business/10nocera.html|title=New Crusade for Master of Overstock|date=2006-06-10|accessdate=2008-03-22|first=Joe|last=Nocera|work=The New York Times] Others have suggested that the problem is real, but that the SEC acts to prevent it and that it does not happen on any scale such as Byrne suggests. SEC Chairman Christopher Cox called abusive naked short selling “a fraud that the commission is bound to prevent and to punish.” [cite web|url=http://www.nytimes.com/2007/06/14/business/14sec.html?ref=business |title=S.E.C. Ends Decades-Old Price Limits on Short Selling |first=Floyd|last=Norris|work=The New York Times |date=2007-07-14|accessdate=2008-03-22]

Lawsuits

Overstock filed a lawsuit against the hedge fund Rocker Partners in 2005, for libel, unfair business practices and tortious interference, saying it colluded with a research firm, Gradient Analytics, in short-selling the company while paying Gradient Analytics to publish negative reports about Overstock.com and supplying pre-publication copies to Rocker. Naked short-selling was not alleged in that suit. [cite news|url=http://query.nytimes.com/gst/fullpage.html?res=9C00E7D91F3EF936A15751C0A9609C8B63|title=Overstock's Campaign Of Menace|date=2006-02-25|accessdate=2008-03-22|work=The New York Times|first=Joe|last=Nocera] Rocker Partners, renamed Copper River Management, filed a counterclaim against Overstock in November 2007, alleging overstatement of profits, false projections, and misrepresentations about the company's ventures. ["Copper River Files Countersuit Vs Overstock, CEO, Directors," by Carol Remond, Dow Jones News Service, 10 Nov. 2007] Copper River also alleges that Byrne tried to silence critics by suing them. [cite news|url=http://money.cnn.com/2007/11/28/magazines/fortune/overstock_1128.fortune/?postversion=2007112817|title=Overstock.com drama spurs lawsuits|first=Bethany|last=McLean|work=Fortune|date=2007-11-28|accessdate=2008-03-22] cite news|url=http://www.nytimes.com/2007/01/20/business/20online.html?dlbk|title=Flames Flare Over Naked Shorts|first=Dan|last=Mitchell|date=2007-01-20|accessdate=2008-03-22|work=The New York Times] cite web|url=http://www.nypost.com/seven/01022007/business/overstock_com_lashes_out_at_critics_on_web_business_roddy_boyd.htm|title=Overstock.com Lashes Out at Critics on the Web|first=Roddy|last=Boyd|work=New York Post|date=2007-01-02|accessdate=2008-03-22] [cite web|url=http://www.bloomberg.com/apps/news?pid=20601039&sid=aLDKLcXDf9PU&refer=columnist_antilla|title=Overstock Blames With Creepy Strategy|first=Susan|last=Antilla|work=Bloomberg L.P.|date=2007-02-11|accessdate=2008-03-22]

In February 2007, Overstock.com launched a $3.5 billion lawsuit against Morgan Stanley, Goldman Sachs and other large Wall Street firms, alleging a "massive illegal stock market manipulation scheme" involving naked short selling. Among its allegations, Overstock stated that since at least January 2005, naked short selling has accounted for large portions of Overstock stock, in some cases exceding the 23.4 million total shares outstanding. [cite news|url=http://deseretnews.com/dn/view/0,1249,660192260,00.html|title=Overstock sues brokers|date=2007-02-03|accessdate=2008-03-22|work=Deseret Morning News|first=Danny|last=King] The lawsuit alleged that this had created "immense downward pressure" on share prices over time. Kerry Fields, associate professor of law and business ethics at the University of Southern California, said, "Byrne may be able to help set new law if he handles this right." Fields said, Byrne's "best approach now is probably to persuade the SEC, which continues to wander around the issue, or the government to serve subpoenas and let them decide whether or not his company was wronged." [cite news|url=http://news.com.com/Overstock+CEO+reflects+on+Cramer+debacle/2100-1030_3-6171494.html|title=Overstock CEO reflects on Cramer debacle|date=2007-03-28|accessdate=2008-03-22|first=Greg|last=Sandoval|work=CNET News] However, Joseph Nocera criticized the lawsuit, while John Coffee, director of the Center on Corporate Governance at Columbia University Law School, described it as overly ambitious and "extremely unpromising." [cite news|url=http://deseretnews.com/dn/view/0,1249,660192260,00.html|title=Overstock sues brokers|date=2007-02-03|accessdate=2008-03-22|work=Deseret Morning News|first=Danny|last=King] Two members of the Overstock.com board of directors, John Fisher and Ray Groves, resigned in disagreement over the lawsuit. [cite news|url=http://findarticles.com/p/articles/mi_qn4188/is_20070224/ai_n18638588|title=Overstock’s Suit Spurs Board Exit|work=Bloomberg L.P.|date=2007-02-24|accessdate=2008-03-22|first=Danny|last=King] [cite news|url=http://www.bloomberg.com/apps/news?pid=20601087&sid=act.r0Ed5Gmw&refer=home|title=Overstock Director Groves Resigns Because of Broker Lawsuit|work=Bloomberg L.P.|date=2007-05-25|accessdate=2008-03-22|first=Danny|last=King]

EC involvement

The campaign has involved the Securities and Exchange Commission to varying extents. An SEC investigation of Gradient Analytics was initiated but then dropped in February 2007. [ [http://www.nypost.com/seven/02142007/business/sec_kills_probe_of_gradient_business_roddy_boyd.htm SEC kills probe of Gradient] February 14, 2007] [ [http://www.nypost.com/seven/05312007/business/appeals_court_sides_with_overstock_com_business_roddy_boyd.htm Appeals court sides with Overstock.com] May 31, 2007] An SEC investigation of Overstock.com and Byrne,cite web|url=http://www.nypost.com/seven/05112007/business/company_byrne_d_on_probe_report_business_roddy_boyd.htm |title=Company Byrne-d on Probe Report |author=New York Post|date=May 11,2007] seeking information as to the company's accounting policies, targets, projections, and estimates relating to its financial performance, [ [http://www.sec.gov/Archives/edgar/data/1130713/000110465907037498/a07-10838_110q.htm SEC Form 10Q filed by Overstock.com, dated May 9, 2007] ] continued but was dropped in June 2008. [http://www.reuters.com/article/marketsNews/idINWNAS748220080606?rpc=44]

In July 2007, two American Stock Exchange options market makers were fined and suspended for using Regulation SHO exemptions to "impermissibly engage in naked short selling" in trades involving options and stocks for their own account. Overstock shares were believed to be among the stocks traded. The market makers settled without admitting or denying the allegations. None of the defendants sued by Overstock were named in the decision, but the Dow Jones News Service said that the decision was likely to be used by Byrne in pursuing his case. [ [http://www.amex.com/atamex/regulation/discipline/2007/SArensteinSBA_Decision_072007.pdf Amex Discplinary Decisions, SBA Trading] ] [ [http://www.amex.com/atamex/news/press/sn_regAA_073107.htm American Stock Exchange announcement of disciplinary action, July 31, 2007] ] [cite |title=AMEX Nabs 2 for Reg SHO abuse; 1 Traded Overstock |author=Carol Remond |publisher=Dow Jones Newswire |date=August 1,2007]

Board of Directors

Overstock.com's current Board of Directors includes Dr. Patrick M. Byrne, Allison H. Abraham, Clay Corbus, Joseph J. Tabacco, Jr., and James V. Joyce. [ [http://investors.overstock.com/phoenix.zhtml?c=131091&p=irol-govBio&ID=149225 Overstock.com, Executives & Directors ] ]

In July 2006, John J. Byrne, the father of Overstock's chief executive, resigned from the board of directors, after a public airing of the elder Byrne's unhappiness with his son's crusade against naked short-selling.cite news|url=http://www.msnbc.msn.com/id/11652266/from/RL.3/|title=Overstock.com chairman mulls stepping down|work=Associated Press|publisher=MSNBC|date=2006-03-03|accessdate=2008-03-22] In August 2008, Jack Byrne said that after "much initial skepticism" he believed his son was "right all along" about the battle and lawsuits with short-sellers and analysts. [ [http://www.sltrib.com/business/ci_10094559 Jack Byrne legendary in insurance circles] , 08/04/2008, The Salt Lake Tribune]

In early 2007, John A. Fisher and Ray Groves resigned from the Overstock board of directors over disagreement with the company's prime broker suit.cite news|url=http://sec.gov/Archives/edgar/data/1130713/000110465907013384/a07-6492_1ex99d1.htm|title=Letter to Patrick Byrne from John A. Fisher, Overstock.com SEC filing|date=2007-03-23|accessdate=2008-03-21|first=John|last=Fisher|publisher=U.S. Securities and Exchange Commission] cite web|url=http://www.sec.gov/Archives/edgar/data/1130713/000110465907042850/a07-15216_1ex99d2.htm|title=Letter from Ray Groves to Patrick Byrne|date=2007-05-24|accessdate=2008-03-22|first=Ray|last=Groves|publisher=U.S. Securities and Exchange Commission]

On January 2, 2008,cite news|url=http://investors.overstock.com/phoenix.zhtml?c=131091&p=irol-newsArticle&ID=1090658|title=Jason Lindsey Resigns as Director, President, and COO of Overstock.com|date=2008-01-02|accessdate=2008-03-22|work=Overstock.com|first=Kirstie|last=Burden] Overstock announced that cofounder Jason Lindsey had resigned as President, COO, and as a Director of Overstock effective from December 31, 2007. Byrne said Lindsey had "played a decisive role getting [Overstock] back on track" after "I screwed it up a couple years ago".cite news|url=http://www.reuters.com/article/consumerproducts-SP/idUSN0217285520080103|title=UPDATE 1-Overstock.com says co-founder Lindsey resigns|date=2008-01-02|accessdate=2008-03-22|first=Alexandria|last=Sage|work=Reuters] Overstock stock dropped to a four-year low following the announcement,cite news|url=http://www.tradingmarkets.com/.site/news/STOCK%20ALERT/957425/|title=Overstock.com At 4-Year Low On COO Resignation|date=2008-01-04|accessdate=2008-03-22|work=RealTimeTraders news] which an analyst for investment bank Broadpoint Capital described as a "key loss".cite news|url=http://www.businessweek.com/investor/content/jan2008/pi2008013_802926.htm|title=Analyst Actions: Monsanto, Overstock.com, Murphy Oil, Digital River|date=2008-01-03|accessdate=2008-03-22|first=Robert|last=Koort|work=BusinessWeek]

References

# Clip, MincedMedia. " [http://www.ireport.com/docs/DOC-18237 Overstock.com Rezzes Into Second Life] ", CNN ireport.com, 2008-05-02. Retrieved on 2008-05-02.

External links

* [http://www.overstock.com Overstock.com]
* [http://finance.yahoo.com/q/bc?s=OSTK&t=5y Five-year stock price]
* " [http://www.ireport.com/docs/DOC-18326 Overstock.com Rezzes Into Second Life] ", CNN ireport.com, 2008-05-02. Retrieved on 2008-05-02.