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Overstock.com, Inc. is an American
internet retailer The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a '' network of networks'' that consists of private, pub ...
selling primarily furniture headquartered in
Midvale, Utah Midvale is a city in Salt Lake County, Utah, Salt Lake County, Utah, United States. It is part of the Salt Lake City, Utah, Salt Lake City, Utah Salt Lake City metropolitan area, Metropolitan Statistical Area. Midvale's population was 34,124 accor ...
, near
Salt Lake City Salt Lake City (often shortened to Salt Lake and abbreviated as SLC) is the Capital (political), capital and List of cities and towns in Utah, most populous city of Utah, United States. It is the county seat, seat of Salt Lake County, Utah, Sal ...
. Businessman Patrick M. Byrne founded Overstock.com in 1999. The company initially sold exclusively surplus and returned merchandise on an online
e-commerce E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain manageme ...
marketplace, liquidating the inventories of at least 18 failed
dot-com companies A dot-com company, or simply a dot-com (alternatively rendered dot.com, dot com, dotcom or .com), is a company that does most of its business on the Internet, usually through a website on the World Wide Web that uses the popular Generic top-level d ...
at below-wholesale prices. The company continues to sell home decor, furniture, bedding, and many other goods that are closeout merchandise; however, it also sells new merchandise. In May 2002, Overstock held an
IPO An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
at a per-share price of $13; furthermore, after achieving significant growth and profits in some early quarters, the company achieved a profit of $7.7 million in 2009 and reported its first billion-dollar year in 2010. The business started
rebranding Rebranding is a marketing strategy in which a new name, term, symbol, design, concept or combination thereof is created for an established brand with the intention of developing a new, differentiated identity in the minds of consumers, investors ...
in early 2011, as "O
.co .co is the Internet country code top-level domain (ccTLD) assigned to Colombia. It is administered by .CO Internet S.A.S.,
", to simplify and unify its international operations but interrupted this effort a few months later, citing consumer confusion over the new name, which utilized a
Colombia Colombia (, ; ), officially the Republic of Colombia, is a country in South America with insular regions in North America—near Nicaragua's Caribbean coast—as well as in the Pacific Ocean. The Colombian mainland is bordered by the Car ...
n country domain.


Business model and management

Part of Overstock.com's merchandise is purchased by or manufactured specifically for the company. Among their products are handmade goods produced for Overstock by workers in
developing nations A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
. The company also manages the inventory supply for other retailers. In addition to its direct retail sales, Overstock.com began offering
online auction An online auction (also electronic auction, e-auction, virtual auction, or eAuction) is an auction held over the internet and accessed by internet connected devices. Similar to in-person auctions, online auctions come in a variety of types, with d ...
s on its website in 2004, known as Overstock.com Marketplace and later O.co Marketplace. This service was retired in July 2011. After initially relying solely on word-of-mouth marketing from customers, the company turned to distinctive
television advertisement A television advertisement (also called a television commercial, TV commercial, commercial, spot, television spot, TV spot, advert, television advert, TV advert, television ad, TV ad or simply an ad) is a span of television programming produce ...
s starring
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actress Sabine Ehrenfeld. Later, they would employ other advertising spokespersons. In July 2006,
John J. Byrne John J. Byrne (July 11, 1932 – March 7, 2013) was an American longtime insurance industry executive who was CEO of GEICO, White Mountains Insurance Group and Fireman's Fund. He also served as chairman of Overstock.com. Early background ...
, 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 actions against naked short-selling. 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. In 2010 the elder Byrne returned to the Overstock.com board of directors. 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. On January 2, 2008, 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 verstockback on track" after "I screwed it up a couple years ago". Overstock stock dropped to a four-year low following the announcement, which an analyst for investment bank Broadpoint Capital described as a "key loss". In 2011, revenues dropped 5 percent over a two-month penalty period imposed by Google. According to the Associated Press, Overstock set up fake websites linking back to its own site. Overstock said it was penalized in part for a practice of encouraging college and university websites to post links to Overstock pages so that students and faculty could receive discounts. As a result of the Google penalty, search results for certain products dropped in Google rankings. During the same year, Overstock.com acquired naming rights to the former
Oakland–Alameda County Coliseum Oakland Coliseum, currently naming rights, branded as RingCentral Coliseum, is a stadium in Oakland, California. It is part of the Oakland–Alameda County Coliseum Complex, with the adjacent Oakland Arena, near Interstate 880 (California), In ...
, renaming it Overstock.com Coliseum. The Coliseum was later rebranded O.co Coliseum, in keeping with Overstock's then-rebranding as O.co (in April 2016, the name O.co Coliseum was dropped in favor of Oakland-Alameda Coliseum). In 2013, Overstock began promoting increased immigration. Overstock president Jonathan Johnson told the ''Los Angeles Times'' that his firm had struggled to hire enough computer programmers and software developers to expand the business. "We pay more, and they are still hard to fill", he said. "We need to be more free in letting people in. That helps us solve our border problem. No one goes through the window of a house if they can ring the doorbell and come in the front door." In 2014, Overstock began developing software that would allow it to distribute corporate stock online instead of using traditional methods like the New York Stock Exchange or NASDAQ. Byrne took an indefinite leave of absence in April 2016, because of
hepatitis C Hepatitis C is an infectious disease caused by the hepatitis C virus (HCV) that primarily affects the liver; it is a type of viral hepatitis. During the initial infection people often have mild or no symptoms. Occasionally a fever, dark urine, a ...
complications. The
general counsel A general counsel, also known as chief counsel or chief legal officer (CLO), is the chief in-house lawyer for a company or a governmental department. In a company, the person holding the position typically reports directly to the CEO, and their ...
, Mitch Edwards, was named acting CEO. In July 2016, Byrne returned as CEO. The company announced a digital dividend with a record date of September 23, 2019. For each 10 shares of traditional stock held, and investor will be entitled to 1 share of Digital Voting Series A-1 Preferred Stock. Initially the digital shares will only be tradable on the PRO Securities alternative trading system, which licenses its technology from tZero, an overstock subsidiary focused on blockchain technology.


Worldstock

In 2001 Overstock set up the Worldstock division, to showcase the work of
artisans An artisan (from french: artisan, it, artigiano) is a skilled craft worker who makes or creates material objects partly or entirely by hand. These objects may be functional or strictly decorative, for example furniture, decorative art, s ...
from around the world. By 2006 there were approximately 6,000 producers contributing.


Bitcoin

On January 9, 2014, Overstock.com became the first major retailer to start accepting
bitcoin Bitcoin ( abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distr ...
as payments for its goods. In the first 22 hours, they received over 800 orders worth US$126,000 in bitcoin. This represents a 4.33% increase in sales from their normal income of $3 million per day. As of March 13, 2014, Overstock bitcoin income had shrunk to under 1% of their normal daily cash intake. In a community interview with social media site Reddit on May 3, 2014, in response to a question to the Overstock CEO Patrick Byrne about the percentage of revenue and transactions paid for in bitcoin, Byrne responded that the percentage was "Tiny. <.1%". In mid-2014 Overstock.com announced that bitcoin sales were averaging $300,000 per month and that the company expected bitcoin sales to add 4 cents to the company's 2014 earnings per share. Despite at least $175 million in bitcoin or other blockchain investments, the firm never recorded any profits from those investments.


CEO resignation

On August 22, 2019, CEO Patrick Byrne resigned his CEO and board seat at Overstock via a 1,600 word email. In the email he admitted to a romantic affair with
Maria Butina Maria Valeryevna Butina (russian: Мари́я Вале́рьевна Бу́тина, sometimes transliterated as Mariya Butina; born November 10, 1988) is a Russian politician, political activist and former entrepreneur who was convicted in 20 ...
, an unregistered foreign agent of
Russia Russia (, , ), or the Russian Federation, is a List of transcontinental countries, transcontinental country spanning Eastern Europe and North Asia, Northern Asia. It is the List of countries and dependencies by area, largest country in the ...
, but Byrne did not provide additional information on how this prompted his resignation. Shortly thereafter,
Jonathan E. Johnson Jonathan "JJ" Johnson (born Jonathan Edward Johnson III) is an American business executive, currently serving as the CEO for Overstock.com. He was a candidate for the Republican nomination in the 2016 Utah gubernatorial election. Personal life an ...
became CEO.


Naked short selling controversy

The company has received attention stemming from CEO Patrick Byrne's battle against alleged
naked short selling Naked short selling, or naked shorting, is the practice of short-selling a tradable asset of any kind without first borrowing the asset from someone else or ensuring that it can be borrowed. When the seller does not obtain the asset and deli ...
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 total quantity of the company's stock, establish that it has been targeted by this practice. 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 Profit may refer to: Business and law * Profit (accounting), the difference between the purchase price and the costs of bringing to market * Profit (economics), normal profit and economic profit * Profit (real property), a nonpossessory intere ...
. New York Times columnist
Joseph Nocera Joseph Nocera (born May 6, 1952) is an American business journalist, and author. He has written for The New York Times since April 2005, writing for the Op-Ed page from 2011 to 2015. He was also an opinion columnist for Bloomberg L.P.#Bloomberg O ...
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." 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 Charles Christopher Cox (born October 16, 1952) is an American attorney and politician who served as chair of the U.S. Securities and Exchange Commission, a 17-year Republican member of the United States House of Representatives, and member of t ...
called abusive naked short selling "a fraud that the commission is bound to prevent and to punish." Overstock filed a lawsuit against the hedge fund Rocker Partners in 2005 for
libel Defamation is the act of communicating to a third party false statements about a person, place or thing that results in damage to its reputation. It can be spoken (slander) or written (libel). It constitutes a tort or a crime. The legal defini ...
, unfair business practices and
tortious interference Tortious interference, also known as intentional interference with contractual relations, in the common law of torts, occurs when one person intentionally damages someone else's contractual or business relationships with a third party, causing e ...
, 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. In a conference call with analysts in August 2005, a day after the suit was filed, Byrne said that "there's been a plan since we were in our teens to destroy our stock, drive it down to $6–10 ... and even a plan for how the company would then get whacked up." He said that the conspirators were part of a "Miscreants Ball", headed by a "Sith Lord", who he refused to identify but said "he's one of the master criminals from the 1980s." Byrne said the conspiracy included hedge funds, journalists, investigators, trial lawyers, the SEC, and
Eliot Spitzer Eliot Laurence Spitzer (born June 10, 1959) is an American politician and attorney. A member of the Democratic Party (United States), Democratic Party, he was the 54th governor of New York from 2007 until his resignation in 2008. Spitzer was b ...
.""The Phantom Menace"
Bethany McLean,
Fortune Magazine ''Fortune'' is an American multinational business magazine headquartered in New York City. It is published by Fortune Media Group Holdings, owned by Thai businessman Chatchaval Jiaravanon. The publication was founded by Henry Luce in 1929. The ...
, November 15, 2005
Gradient Analytics countersued, alleging Byrne waged a
smear campaign A smear campaign, also referred to as a smear tactic or simply a smear, is an effort to damage or call into question someone's reputation, by propounding negative propaganda. It makes use of discrediting tactics. It can be applied to individual ...
. 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 also alleges that Byrne tried to silence critics by suing them. A portion of this suit was
settled out of court In law, a settlement is a resolution between disputing parties about a legal case, reached either before or after court action begins. A collective settlement is a settlement of multiple similar legal cases. The term also has other meanings in t ...
on October 13, 2008 when Overstock.com and Gradient dropped the claims against each other after Gradient retracted allegations that Overstock's reporting methods did not comply with rules established by the
FASB The Financial Accounting Standards Board (FASB) is a private standard-setting body whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public's interest. The Securi ...
, stated they believed Overstock.com complied with
GAAP Gaap (also ''Tap'', ''Coap'', ''Taob'', ''Goap'') is a demon that is described in demonological grimoires such as ''the Lesser Key of Solomon'', Johann Weyer's ''Pseudomonarchia Daemonum'', and the Munich Manual of Demonic Magic, as well as Jac ...
standards, and that three directors were independent according to NASD standards, and apologized. Byrne has said the apology and settlement "represents a great step forward in our case", while Copper River's attorney stated that "If somehow this improved Overstock's case, then Gradient would admit to doing something wrong and they haven’t", and that he expected the settlement to help Copper River's case. On December 8, 2009, it was announced that Copper River had reached an out of court settlement with Overstock. As part of the agreement, Copper River, which closed in December 2008, agreed to pay Overstock $5 million. In a letter to his shareholders, Patrick Byrne said, "The good guys won". Copper River said in a statement that it continued to deny Overstock's allegations. Copper River managing general partner Marc Cohodes said "Although settlement deprives us of the ability to disprove Overstock's case and prosecute our counterclaims, we decided that the litigation costs did not justify passing up a practical way to end four-and-half years of meritless litigation by Overstock." In February 2007, Overstock.com launched a $3.5 billion lawsuit against
Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
,
Goldman Sachs Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, H ...
and other large Wall Street firms, alleging a "massive illegal stock
market manipulation In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances ...
scheme" involving
naked short selling Naked short selling, or naked shorting, is the practice of short-selling a tradable asset of any kind without first borrowing the asset from someone else or ensuring that it can be borrowed. When the seller does not obtain the asset and deli ...
. 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 exceeding the 23.4 million total shares outstanding. 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 The University of Southern California (USC, SC, or Southern Cal) is a Private university, private research university in Los Angeles, California, United States. Founded in 1880 by Robert M. Widney, it is the oldest private research university in C ...
, 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."
John Coffee John R. Coffee (June 2, 1772 – July 7, 1833) was an American planter of Irish descent, and state militia brigadier general in Tennessee. He commanded troops under General Andrew Jackson during the Creek Wars (1813–14) and during the Battle o ...
, director of the Center on Corporate Governance at
Columbia University Columbia University (also known as Columbia, and officially as Columbia University in the City of New York) is a private research university in New York City. Established in 1754 as King's College on the grounds of Trinity Church in Manhatt ...
Law School, described it as overly ambitious and "extremely unpromising." Two members of the Overstock.com board of directors, John Fisher and Ray Groves, resigned in disagreement over the lawsuit. In December 2010, all but two of the prime broker defendants settled out of court with Overstock for $4.4 million. That same month, the company filed a motion seeking to amend its lawsuit against the remaining defendants—Goldman Sachs and Merrill Lynch—to include claims of
RICO The Racketeer Influenced and Corrupt Organizations (RICO) Act is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. RICO was en ...
violations. The enhanced claims were based on evidence gained through discovery in the case. The RICO claim was dismissed at trial, and this was affirmed on appeal. The claim against Goldman was dismissed but Goldman subsequently settled a refiled suit. Merrill finally settled for $20 million in 2016.


See also

*
E-commerce E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain manageme ...
*
Online auction An online auction (also electronic auction, e-auction, virtual auction, or eAuction) is an auction held over the internet and accessed by internet connected devices. Similar to in-person auctions, online auctions come in a variety of types, with d ...


References


External links


Overstock.com

Five-year stock price
*
Overstock.com Rezzes Into Second Life
, CNN ireport.com, 2008-05-02. Retrieved on 2008-05-02. {{DEFAULTSORT:Overstock.com Companies based in Salt Lake County, Utah Midvale, Utah Retail companies established in 1997 American companies established in 1997 Internet properties established in 1997 Online retailers of the United States 1997 establishments in the United States 1997 establishments in Utah Companies listed on the Nasdaq 2002 initial public offerings Companies established in 1997