Overstock˳com, with its very successful television campaign and terrific deals on wholesale merchandise of all kinds seems to be a model for the new online economy˳ The company has become something of a darling in the online wholesale world but all is not well˳ However, Overstock˳com has been troubled by shipping problems, legal struggles and an ongoing financial crisis˳ While the company enjoys an excellent reputation over all questions have been piling up˳
A little over a year ago the Federal Trade Commission launched an investigation after receiving numerous complaints from customers regarding Overstock’s shipping policies˳ At the time Overstock claimed that the increased complaints were a natural result of the dramatic increase in the number of orders they shipped and was not because of any illicit behavior on their part˳
On Tuesday, February 28 the Salt Lake City based company announced that it would be revising economic reports pertaining to the company all the way back to 2002˳ They claim that a long running error regarding freight costs has caused them overstate their economic loses during that period˳
When all the recalculation is said and done it should increase Overstock’s inventory and reduce its loses by $3˳5 million˳ Overstock says they will re-file their reports with the Securities and Exchange Commission as soon as they can˳ Investors seemed to regard the revision as bad news and the company’s stock dropped 53 cents a share˳ This adds on to an overall drop in the stock of 18% for the year˳ In fact the present value of Overstock’s shares is less than one half of their all time high that approached $60 a share˳
Early in February the company released annual financial data that showed that the company had a net loss of $25 million despite increased earnings˳ So while the regained $3˳5 million might seem like good news it will have little effect on the company’s expanding economic problems˳
In August of last year Overstock’s former chairman, Patrick Byrne filed suit in California against Rocker Partners and Gradient Analytics accusing the investment fund businesses of conspiracy˳ Byrne has claimed that the financial analyst purposely tried to drive down Overstock’s value by making erroneous, if not fraudulent, statements on MSNBC and other financial news outlets with the intention of reaping ill-gotten personal profits for themselves and their hedge fund partners˳ However, many say that Overstock’s depressed stock value is their own fault for posting disappointing earnings and failure to provide a real business model˳
Patrick Byrne’s struggle with enemies, either real or imagined, has undermined confidence in the company˳ Byrne has been accused of trying to draw attention from Overstock’s disappointing financial performance˳ Lending credibility to those who believe Byrne has come unhinged is his very public debate with Dallas Maverick’s owner Mark Cuban who he called a miscreant as well as other less prosaic adjectives˳
While none of these issues are of immediate concern for customers of Overstock and the company certainly isn’t about to fail anytime soon, it is somewhat alarming to know that they’ve been operating this long with out proper accounting controls over so vital apart of their business as shipping˳ If they are so slipshod as to not notice $3˳5 million in discrepancies for four years there may well be other areas where Overstock’s overseers aren’t doing too good a job as well˳
If the company’s problems, particularly regarding earnings, continue there may well be changes to the way they do business˳ These changes are almost certain to affect Overstock’s wholesale customers first˳ Companies make changes where the money is and at Overstock the majority of their money comes from customers buying in bulk for resell˳
Investors will demand change in the company’s methods eventually˳ If an Overstock customer is depending on the company’s present economic structure for the survival of their own business they’d better pay close attention to Overstock’s evolving condition˳
Source by https://ezinearticles˳com/?The-Many-Woes-of-an-Online-Giant&id=167459
