Tracking the Lies of Overstock.com and the Fantasies of Patrick Byrne
A kind of parlor game follows every quarterly conference call of the slo-mo train wreck Overstock.com: What will be the latest distortions, fantasies and outright lies? Yesterday's produced such a rich assortment that it's hard to know where to begin.
The fantasy emerged after the conference call, in an appearance on Fox Business News. Herb Greenberg reports that Overstock's dipsy doodle CEO Patrick Byrne said that he "happen[ed] to know for a fact that there’s a fax machine in the CNBC offices where hedge funds send instructions and journalists sit around and take instructions.”
Host Liz Claman shot back, “Well I worked in CNBC and I never saw that fax machine.” This was a refreshing change from the usual reaction of interviewers in Byrne's live TV appearances, who usually sit gape-mouthed after Byrne sets off a stink bomb like this.
Byrne's rejoinder was "I have a good source on that." Translation: "I'm making this up out of thin air."
Herb wonders whether it's "time to feel sorry for Patrick Byrne. . . whose comments at times, such as today, appear to be detached from any sense of reality."
I assume Byrne won't be posting a video clip of this embarrassing spectacle on
Turning from pathology to garden-variety lies -- they came fast and furious at the conference call, and I am sure that forensic lie-pathologists will be dissecting this one for weeks. A number of boners stood out. Here are two of them:
The first involved the non-comparability of the first quarter sales numbers to the ones a year ago. That's an undeniable fact, as laid out by reformed felon Sam Antar in a blog item on Monday.
General counsel Jonathan E. Johnson was quoted by Wired.com as saying the following:
"Sam is just wrong,". . . "They're both GAAP numbers . . . I can't read his blog because it's so full of lies."The only problem with this statement is that it is a flat-out lie. Overstock was comparing a non-GAAP number (the first quarter 2007 number) with a GAAP number (the first quarter 2008 number). Sam has more details. "Leave it to Overstock to make matters worse," says forensic accountant Tracy Coenen.
Tracy further expounds on the farcical nature of this whole charade in a follow-up.
I'm saving the best for last. The pièce de résistance was the fish story provided at the conference call and in the Wired article as to why the earnings were released unexpectedy on Friday. As I pointed out the other day, this was a blatant effort to squeeze the shorts on an options expiration Friday, and to bury devastating news of a five-county criminal investigation of its advertising practices by California prosecutors. Even one of the normally supine analysts who cover this company acknowledged at the time that a short squeeze was at work.
Explaining this one away would take a real whopper, and Overstock's "designated liar" (the way you might appoint a "designated driver" after a party) obliged in the Wired article:
"What happened was this: Patrick Byrne was speaking at Wharton [School of Business] on Friday, and we wanted to get to the numbers out before he gave that speech," Johnson says.Yup. Overstock is physically incapable of putting out an earnings release when its invaluable CEO, a man dedicated 24/7 to
But if that's the case, then why did the company schedule the release of fourth-quarter results beforehand, but it didn't schedule the release of first-quarter results?
"This time we did not know when we would have a full sign off from auditors," Johnson says.
So "what happened was" that the auditors "signed off" on the earnings, a runner was sent to check if the CEO was giving a speech or in the bathroom or sumthin and zoom! the release went out. (Which kinda begs the question of why the auditors would have to sign off on first quarter earnings, since quarterly results are unaudited, but what the hey....)
Or maybe the speech was to contain details of the quarterly results, so rather than simply not talk about the numbers, they rushed out the release and accidentally on purpose surprised the market.
Both are fantastically believable scenarios. I believe 'em. Don't you?
UPDATE: The widely followed Silicon Valley Insider spread word to all and sundry about Byrne's sicko fantasy, and was picked up by Huffington Post and TV Newser. The man's capacity for self-humiliation is awe-inspiring.
© 2008 Gary Weiss. All rights reserved.