Overstock Falls Short

Overstock.com (OSTK Quote) posted a weak fourth quarter and said it would need two or three quarters to recover from an internal systems pratfall.

The Salt Lake City-based online retailer didn't break out the quarterly bottom line in its earnings press release, saying it was working out some finer points on an accounting change with its auditors. The heavily shorted stock rallied 5% as CEO Patrick Byrne made yet another melodramatic appearance on Wall Street's stage.

Overstock said fourth-quarter revenue rose 44% from a year ago to $318 million, leaving it well short of the $338 million Thomson First Call estimate. The company's quarterly loss was harder to figure, as Overstock didn't specify one in the earnings release. But according to Piper Jaffray analyst Aaron Kessler, the company swung to a fourth-quarter loss of roughly $4.1 million, or 22 cents a share, from the year earlier profit of $2.4 million, or 12 cents.

Analysts surveyed by Thomson were looking for a nickel-a-share loss. Kessler, who rates the shares underperform and whose firm has done investment banking for Overstock in the past, was looking for a 26-cent-a-share loss.

Overstock shares, which have dropped 19% since the start of the year, rose $1.21 to $23.96.

The positive reaction didn't make sense to some observers. "It is certainly possible that there is short-covering," says Rebecca Jones Kujawa, an analyst with Stanford Group in Boca Raton, Fla., who rates the shares hold.

Overstock did grace investors with an actual statement of its full-year results. The company lost $24.9 million, or $1.29 a share, for the year ended Dec. 31, compared with the year-ago loss of $5 million, or 29 cents a share. Revenue rose 63% to $803.8 million.

Byrne, after last year saying he aimed to post a 60%-100% revenue gain for 2005 with a break-even bottom line, conceded that the company failed to attain the latter goal.