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Just after the close of the market Wednesday, Overstock.com (NASDAQ: OSTK) issued a press release announcing the departure of a top executive. Effective December 31, Jason Lindsey resigned as president and chief operating officer and left the board of directors. Lindsey was the third Overstock board member to resign in 2007.This hurts, and observers can only wonder if this is a sign of the Overstock.com ship finally sinking under the direction of CEO Patrick Byrne. Byrne is known far and wide for his publicity stunts and various antics in the name of his pet projects, all the while his company is unable to turn a profit.
What's even more telling about this departure is that Lindsey helped found the company. Byrne is quoted, "When I screwed it up a couple years ago, he came out of retirement, and has played a decisive role getting it back on track." At least Byrne is finally willing to admit that he screwed up the company!
It is interesting that someone so vested in the company from the beginning is essentially walking away. They say Lindsey will stay on at Overstock on a part-time basis, but one has to wonder if there's really any substance to that.
Byrne suggests that the departure of Lindsey is somehow related to Overstock's "solid trailing twelve-month cash-flow-positive position." The company had about a $53 million decrease in cash during the first nine months of 2007, so clearly Byrne is saying that they made up all that ground in the fourth quarter. It will be interesting to see what the numbers show when earnings are released.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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