Following fourth quarter earnings that sent shares of Overstock.com (NASDAQ: OSTK) soaring, Stifel Nicolaus downgraded the stock from "hold" to "sell."According to Briefing.com "The firm says not appropriately reflected in Friday's share price move, was the fact that the quarter benefited from a $1.8 mln gain in partner gross profit dollars relating to payments from partners who were under-billed earlier in the year and a $3.7 mln one-time benefit from a bonus reversal in the quarter as the company decided not to distribute profit sharing and senior executives were not paid bonuses."
Fascinating. In a self-congratulatory press release announcing the company's results, CEO Patrick Byrne wrote that "After a tough three years, returning to GAAP profitability is a relief."
For the year, the company reported a GAAP loss of $12.7 million. The "GAAP profitability" that Byrne was referring to was a reported net income of $1.0 million for the fourth quarter.
But as Stifel Nicolaus pointed out, that $1 million was a reflection of $5.5 million in one-time gains. Without that, the "GAAP profitability" turns into a "GAAP unprofitability" of $4.5 million. Byrne isn't lying when he says that the quarter was GAAP profitable, but the decision not to be more upfront about the one-time events that impacted the quarter's results provide ample ammunition to the many critics of the company's accounting.
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Reader Comments (Page 1 of 1)
2-02-2009 @ 5:41PM
BHarrison said...
It is this type of "put a positive spin" B.S. on bad news that undermines the integrity of the corporations and the markets. There can be no "fiath and confidence" in any representations or financial reports with all of the ongoing fallout from the "creative accounting practices:, etc. The average investor will have reasonably and prudently lost any confidence in corporate representations. The only way to restore any faith and confidence in corporate America is by Congress INSTILLING INTEGRITY by prudent and reasonable REGULATIONS, and effective ovesight that will issues harsh penalties and criminal indictments for fraudulent accounting practices, and gross financial misrepresentations.
2-02-2009 @ 5:43PM
Dan Barnett said...
But Jamie Dlugosch likes the stock.