Overstock's Brash CEO Delivers 1st Annual Profit

PAUL FOY

SALT LAKE CITY (AP) — If Overstock.com's unconventional CEO had a defining moment, it might have been a conference call he had with investors five years ago.

For an hour, Patrick Byrne lashed out at what he called a conspiracy of short sellers and others plotting to destroy his company's share price so a "bottom feeder" could take over the Internet discounter. Byrne says his point was to expose "crooked" hedge funds and how federal regulators were powerless to stop them.

"We've got a group of parasites who have found a loophole that they can keep on using to just drain resources out of entrepreneurs in America, and in the process kill small companies," Byrne thundered on the call.

The jury is still out on many of these claims. Byrne has filed a lawsuit that he says will put major brokerage houses on trial next year to face allegations they abetted a questionable form of trading called naked short selling.

But Overstock.com Inc. reported its first annual profit Wednesday, giving Byrne a win in his personal crusade. Shares of the company rose more than 30 percent, almost passing their 52-week high of $17.99. The stock has traded as low as $8.94 in the past year.

The company's narrow 2009 gain of $7.7 million, Byrne said, proves that those who traded presuming Overstock's weaknesses were wrong and vindicates his tumultuous effort to position the company as a challenger to the Goliaths of Internet retail.

Overstock's challenge is to remain a price leader in an increasingly crowded market where practically anyone can make a sale from a consumer's Google search, said Nathaniel Schindler, an analyst at Merrill Lynch.

"You can find good inventory and deals on the Internet elsewhere. That just makes it tougher for them," he said.

Byrne says the company, which has 1,260 employees, recognizes that problem and is continually adjusting prices to meet the competition.