Overstock’s CEO Misled Investors About Earnings
Last Updated on Wednesday, 11 August 2010 04:00 Written by a2e Wednesday, 11 August 2010 04:00
I have reported frequently on a range of securities law violations by Overstock.com (NASDAQ: OSTK). The company’s latest earnings report on Aug. 9 raises still new questions, concerning possible insider trading and misleading statements by the company’s CEO, Patrick Byrne.
On Aug. 9, Overstock.com issued its Q2 2010 10-Q (quarter ended June 30) report and surprised investors by reporting a $1.4 million loss, or a loss of $0.06 per share, compared to a small $319k reported profit or earnings per share of $0.01 in the previous year’s comparable quarter, despite higher revenues.
Overstock.com failed to meet consensus analyst expectations for earnings, too. Overstock.com’s reported loss of $0.06 per share was far worse than analyst expectations of a $0.04 per share loss or a 50% higher loss than expected.
A disturbing event preceded this announcement.
On May 20, 2010, Patrick Byrne’s 100% controlled High Plains Investments LLC dumped 140,000 company shares and collected over $3 million in proceeds during the last several days, according to SEC filings. That was the first time that Patrick Byrne had ever sold any Overstock.com shares under his control. In my blog, I noted that such a sale was “not a bullish signal to investors.”
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