Monday, October 27, 2008's Emily Litella Financials

Never mind!

The quarterly financial statements and analyst conference calls of my favorite corporate fraud poster child,, are eagerly awaited entertainments. They are replete with "trucks hitting cows" excuses, quotations from Eastern philosophers, schemes worthy of Ralph Kramden (such as the ever-unpopular Omuse), and plenty of strange, pseudo-intellectual doubletalk designed to obfuscate the company's broken business model.

The latest entertainment from Overstock, on Friday, was straight out of Saturday Night Live in the 1970s, when Gilda Radner's Emily Litella character used to mangle some current event and then say "never mind."

Obfuscations and falsehoods were, of course, in abundance, as Sam Antar points out. That is to be expected from Overstock's dipsy doodle CEO Patrick Byrne -- who is so terrified of Sam that he responded at length, if incoherently, to questions that he posed in his blog.

But the real fun at Friday's conference call was a whopping "never mind": Overstock said that its financial statements dating way back to 2003 cannot be relied upon, and restated them. However, the company had already restated its financials from 2002 and 2005 because of an "inventory accounting error," and made a "cumulative adjustment" in 2007 because of a "revenue accounting error" -- making it well neigh impossible to figure out exactly how much money Overstock is losing.

Byrne supplied the usual cock-and-bull story to describe why the company had to engage in this massive re-re-restatement. Given his history of making up stuff as he goes along -- this is a man who claimed in a 2005 conference call that his stock was manipulated by a "Sith Lord" he dreamed up on the spot -- it's safe to assume that his latest "upgraded our system but forgot to blah-blah" story is yet another fairy tale.

Forensic accountant Tracy Coenen observes:

You can be sure of two things when looking at (NASDAQ:OSTK) financial statements:

  1. They’re wrong
  2. There are massive losses (which will be even bigger when #1 comes to light)
You can also safely assume that the SEC will do nothing about it -- just as surely as you can assume that the analysts on the call (the much-feared Antar having been excluded), timidly let all this bullcrap fly, unchallenged.

However, with the change of administrations -- and the disastrous pro-corporate policies of the Bush SEC under attack -- Byrne's serial lies and obfuscations may no longer go unpunished.

UPDATE: Byrne celebrated his company's latest Byrne-caused misery in typical fashion, by lying.

Tracy Coenen raises an intriguing question: how is that a supposed systems glitch in 2005 can affect financials back to 2003?

I used to end items like this by saying "SEC take notice." But we all know that the ineffectual, demoralized, useless Bush administration SEC doesn't take notice of corporate train wrecks, and when it does it doesn't give a damn. Fortunately, a new SEC will be coming down the pike in January, and perhaps the new SEC will take notice.

© 2008 Gary Weiss. All rights reserved.

Digg my article

Labels: , , ,

Links to this post:

Create a Link

<< Home

Enter your email address:

Delivered by FeedBurner