Translating Corporate Speak: OSTK and Patrick Byrne

by Johnny Debacle

Corporate speak:

“I have a fiduciary duty to defend the company. These manipulative activities have caused tremendous damage to Overstock. I believe that this conduct is harming our company and our shareholders deeply, and that investors have been failed by those who have a duty protect them. The best way to address and solve the problem is to get it in front of a jury of 12 Californians.”
-Patrick Byrne, CEO of Overstock.om (NASDAQ: OSTK) in a February 5th 2007 press release announcing a $3.5bn suit by OSTK against Wall Street itself more or less.

Translation:

I am obsfucating my fiduciary responsibility to produce anything but disappointing results from Overstock.com’s operations. The best way to do this is to get worked up about something (naked shorting and related conspiratorial behavior) which would likely have a very marginal impact on any long term long position in OSTK stock. Please ignore the fact that companies are supposed to produce money not lawsuits.

Corporate speak:

“The fourth quarter was a difficult end to a tough rebuilding year. While there are plenty of negatives to report, I believe the company has fixed the problems that began in Q4 2005, and we are entering 2007 with a fresh start….The company is healthier as a result [of actions taken in Q4].”
Patrick Byrne in his February 5th 2007 letter to OSTK shareholders

Translation:

The company has improved its health from not healthy to unhealthy.

Corporate speak:

“Based on our preliminary January numbers and our internal 2007 plan, I expect our 2007 results to improve. Specifically, we should:
  • Achieve immediate and substantial gross margin improvements;
  • Reduce sales and marketing as a percentage of revenue;
  • and Reduce technology and G&A expenses from 2006 levels.”

-Patrick Byrne in the same letter

Translation:

After spending Christmas studying with Yoda on Degoba, I can channel the force to see the future like a powerful Jedi. We should:
  • Achieve an immediate reduction in gross margins;
  • Spend more on marketing as a % of revenue
  • Have one time increases in technology and G&A expenses which I will describe as mud pies in some future shareholder letter;
  • Claim in next quarter’s letter that after a disappointing quarter (which relative to now would be “next quarter”) that next quarter (which relative to now would be “next next quarter”) will be the quarter we finally turn it around.

In closing, having seen the future, I can assure our investors that Overstock.com will never ever turn the corner.

(Pointer by Gary-Weiss.com)

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