Overstock.com plummets on earnings

Shares of Overstock.com (NASDAQ: OSTK) are down nearly 30% after the company reported second quarter earnings. Revenue rose 27 percent to $188.8 but the company reported yet another big money-losing quarter, with $6.5 million, or 28 cents per share, flying out the door.

One way to evaluate the candor of management is to look at the company's statements in its press release announcing news -- if the company says all kinds of wonderful things about how great everything, but the stock still goes down 30%, it means that you're dealing with people who put lipstick on a pig. Here are some examples of the self-congratulatory tone of the earnings release. "For the first time in its history your business has generated four consecutive quarters of positive EBITDA and TTM operating cash flows. . . Our financial condition is sound despite a weak economy."

There's no mention of what went wrong in the press release, but obviously most people were hugely disappointed with the quarter. One problem for Overstock is that the company's sales and marketing expense ballooned 79% to $14.2 million.

You'll be happy to know that chairman and CEO Patrick Byrne continues to spout nutty conspiracy theories and post on message boards, arguing with anyone who dares criticize him.