Comments on: Why the Overstock inventory issue matters http://www.sequenceinc.com/fraudfiles/2007/05/07/why-the-overstock-inventory-issue-matters/ Sat, 20 Mar 2010 22:05:23 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: Tracy http://www.sequenceinc.com/fraudfiles/2007/05/07/why-the-overstock-inventory-issue-matters/comment-page-1/#comment-36682 Tracy Mon, 07 May 2007 19:26:04 +0000 http://www.sequence-inc.com/fraudfiles/2007/05/07/why-the-overstock-inventory-issue-matters/#comment-36682 There was a SMALL improvement in the margin related to inventory, so I had to give them credit for that. I do realize that the partner business is providing most of the improved margins however... There was a SMALL improvement in the margin related to inventory, so I had to give them credit for that. I do realize that the partner business is providing most of the improved margins however…

]]> By: Namazu http://www.sequenceinc.com/fraudfiles/2007/05/07/why-the-overstock-inventory-issue-matters/comment-page-1/#comment-36659 Namazu Mon, 07 May 2007 19:00:07 +0000 http://www.sequence-inc.com/fraudfiles/2007/05/07/why-the-overstock-inventory-issue-matters/#comment-36659 Greetings from Motley Fool's Overstock.com discussion board, where nothing entertaining and slightly OSTK-related is considered a waste of time! Your in-depth coverage is very helpful; thanks for the great post. To one of your questions, the margin improvement is directly tied to the relative increase in size of their PARTNER business (and improved margins therein) vs. their DIRECT (warehouse-based) business, where margins have been dismal and sinking. Hence, improved margins signify nothing, because as they pertain to inventory, they don't exist. What was also interesting about Q1 was the big drop in direct sales. Would anyone be shocked if more recent inventory numbers showed that they were just kicking the problem down the road? If I were a cynical person, or one who has followed this company for a while, I might be led to think a bunch of inventory was held back to keep Greetings from Motley Fool’s Overstock.com discussion board, where nothing entertaining and slightly OSTK-related is considered a waste of time! Your in-depth coverage is very helpful; thanks for the great post. To one of your questions, the margin improvement is directly tied to the relative increase in size of their PARTNER business (and improved margins therein) vs. their DIRECT (warehouse-based) business, where margins have been dismal and sinking. Hence, improved margins signify nothing, because as they pertain to inventory, they don’t exist. What was also interesting about Q1 was the big drop in direct sales. Would anyone be shocked if more recent inventory numbers showed that they were just kicking the problem down the road?

If I were a cynical person, or one who has followed this company for a while, I might be led to think a bunch of inventory was held back to keep

]]> By: Nick http://www.sequenceinc.com/fraudfiles/2007/05/07/why-the-overstock-inventory-issue-matters/comment-page-1/#comment-36533 Nick Mon, 07 May 2007 15:35:46 +0000 http://www.sequence-inc.com/fraudfiles/2007/05/07/why-the-overstock-inventory-issue-matters/#comment-36533 Yeah, that's interesting. I would have always assumed that in a business like Overstock's, that reporting inventory would be a significant part of their reporting, and that discrepancies would be taken seriously. They're entire business is built on inventory. It's a large portion of their current value, as well as how they run business. Anything that they hold in stock is potential risk that has to be evaluated. If they are able to buy low and sell high, it pays off. If they buy and can't sell, then that is a potential for loss that investors have to take into account. That would also explain their unwillingness to report stock levels. No company wants to allow investors to speculate on risk like that... and having large stocks of products is a huge risk in that business model. It would make their stock price very volatile. Yeah, that’s interesting. I would have always assumed that in a business like Overstock’s, that reporting inventory would be a significant part of their reporting, and that discrepancies would be taken seriously.

They’re entire business is built on inventory. It’s a large portion of their current value, as well as how they run business. Anything that they hold in stock is potential risk that has to be evaluated. If they are able to buy low and sell high, it pays off. If they buy and can’t sell, then that is a potential for loss that investors have to take into account.

That would also explain their unwillingness to report stock levels. No company wants to allow investors to speculate on risk like that… and having large stocks of products is a huge risk in that business model. It would make their stock price very volatile.

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