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Quarterly earnings calls are a great opportunity for investors to hear directly from the companies they've invested in and to get clarity from management when they answer questions posed by analysts. I listen to hundreds of calls every quarter, and I'm constantly surprised (and sometimes confused!) by the responses offered by management. This is the first in a series of occasional posts on some memorable quarterly earnings call moments.
Overstock.com (NASDAQ: OSTK). Chairman and CEO Patrick Byrne never ceases to . . . amaze me. While I sometimes come away from their quarterly call more perplexed than ever, Byrne's responses to questions certainly stand out. Here are some of the more memorable comments from their latest quarterly call, held on October 24, 2008.
While commenting on accounting errors that resulted in a financial restatement, Patrick Byrne explained it this way:
"We had been managing to a yardstick that turned out to have a bit of rubber in it at the end of the quarter."
Well, that certainly clarifies things!
Moving on to a conversation on EBITDA and Cap Ex, we hear that OSTK is:
". . . like the proverbial boa constrictor digesting a baby hippo. We ate the baby hippo about three years ago -- actually right now -- and it's moved its way through the boa constrictor."
Wow. For further clarity on how OSTK defines EBITDA (earnings before interest, taxes, depreciation and amortization), Byrne goes on to explain:
"The claim that EBITDA is not compliant with SEC definition is nonsense. Our EBITDA reconciles to GAAP. The SEC says you have to reconcile EBITDA to GAAP, we follow, I believe, the general industry practice. The 'A' in EBITDA -- amortization of stock-based compensation -- our EBITDA excludes it."
So it's EBITDA, just without the 'A'? Huh.
Commenting on inventory levels in '06:
"The third one was inventory levels in '06 blah blah blah blah . . . I am not even sure."
So there you have it. In the words of Patrick Byrne, "that's the answer to interminable questions."
Susan Moore is President of EarningsIQ.
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Reader Comments (Page 1 of 1)
11-12-2008 @ 8:52AM
BHarrison said...
With all of the publicity that has been given to this rather "bizzare" CEO, anyone who invests in his company's stock DESERVES whatever happens to them.
A problem occurs when people invest in funds and have no idea that the fund might invest in this stock. "Buyer beware . . .", know where your money is invested, or suffer the consequences. As anyone should know by now, the fund managers and brokers made their money by commissions and fees on transactions without regard to profitability for the customers.
11-14-2008 @ 10:40AM
Ali said...
Well some people never give up like you, the man whoever he is has done very much from all the public appearance he has gotten, everyone made fun of him for while until A FAILING ECONOMY PROVED HIM RIGHT, all his work has been a work of a genius which he is with a doctorate in mathematical philosophy from Stanford which both of you don't have so cut the crap and talk about something that makes sense. overstock is moving a long while many are failing, its the time where people save and shop wisely like overstock.com, read yesterdays wall street journal article on overstock it would clarify your ignorance