Overstock Continues to Mislead Investors With Phony EBITDA Calculation

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Patrick Byrne Naked Short SellingIn the past, I’ve discussed the improper EBITDA numbers reported by Overstock.com (NASDAQ:OSTK). It comes as no surprise that the con game continues with Overstock’s latest reported numbers.

The SEC rules are very simple. “EBITDA” refers to a specific calculation, which is “earnings before interest, taxes, depreciation, and amortization.” Overstock.com and CEO Patrick Byrne have taken liberties with this number, in violation of guidance provided by the SEC on the issue. Continue reading

Overstock.com is Doing Better if EBITDA is Worse Than They Reported?

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This level of logic from the supporters of Patrick Byrne and his supporters is pathetic. Sam Antar has brought up the issue of Overstock.com’s (NASDAQ:OSTK) violation of SEC regulations in reporting EBITDA.

The result of that improper reporting? EBITDA is materially overstated by Overstock.com and the company’s financial results look better than they really are. (Stock price manipulation, anyone?) Continue reading

Patrick Byrne, CEO of Overstock.com Is a Crook, According to Himself

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According to a transcript of an interview that Overstock.com (NASDAQ:OSTK) CEO Patrick Byrne did with CNBC in 2004, he is a crook. Here’s the relevant portion:

Interview: Patrick Byrne, chairman and CEO of Overstock.com, discusses the company’s revenues and earnings

23 April 2004
CNBC: Kudlow & Cramer

Mr. BYRNE: Well, first of all, I’m all about gap [sic]. I have been so critical of the companies that do–I don’t believe in one-time charges; I don’t believe in EBITDA. If somebody talks EBITDA, put your hand on your wallet; they’re a crook.

Well, Patrick has been doing an awful lot of talking about EBITDA. And not only is he talking about it, he’s presenting blatantly false and overstated numbers when talking about it.

I agree with Patrick: He is a crook.

Overstock.com Materially Overstates EBITDA

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Sam Antar has a great article today on Overstock.com (NASDAQ:OSTK) continuing to overstate EBITDA. Specifically, Sam says:

In Overstock.com’s Q1 2008 earnings release and 10-Q report the company continued to improperly remove from its EBITDA calculation, certain stock-based expenses in violation of Regulation G. As a result, Overstock.com’s reported Q1 2008 EBITDA of $3.524 million was materially overstated by $1.339 million or about 61%.

And of course, that overstatement is in addition to the overstatement that results from Overstock.com calculating EBITDA by starting with operating income, instead of net income, as required by the SEC rules. Some people erroneously believe it’s okay to start with a different figure when calculating EBITDA. That’s not true.

The SEC does not permit companies to do that because of the confusion it could cause: Continue reading

Overstock.com: Pretend Accounting Measures Muddy the Waters

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Patrick Byrne Overstock Conspiracy TheoryI present for you today one (just one) example of the accounting shenanigans at Overstock.com Inc. (NASDAQ:OSTK) to demonstrate the deception of management. This accounting concept is quite elementary, and it is called EBITDA.

EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization

Accountants and investors generally agree on what all of those items (earnings, interest, taxes, depreciation, amortization) are. So the computation of EBITDA is quite simple, if presented with accurate and complete financial statements. Continue reading

More on the Overstock.com Accounting Shenanigans

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Patrick Byrne Overstock Accounting IrregularitiesThis year, Patrick Byrne and company have taken a liking to discussing the Overstock.com (NASDAQ: OSTK) financials using non-GAAP measures. This means that they present certain financial figures that are not computed in accordance with GAAP (accounting rules).

Who cares? As long as they disclose that they’re non-GAAP measures, it doesn’t matter, right? Wrong. You see, companies use non-GAAP measures for one of two things: Continue reading

Overstock.com and its phony earnings figures

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Patrick Byrne, CEO of Overstock.com O.coToday on the White Collar Fraud Blog, Sam Antar has the first part of a three part series on the inventory numbers at Overstock.com. It’s curious how Overstock’s inventory numbers always seem to create more questions than they answer.

Sam has some insight into this. As the former CFO of Crazy Eddie, a company that eventually folded after a massive fraud was uncovered, he says that one of the keys to perpetrating the fraud for as long as they did was deflecting attention away from suspicious items. Always put the focus back on the positive; keep everyone looking away from the negative.

In that vein, Overstock’s CEO Patrick Byrne (who is the target of a federal investigation) seems adept at doing exactly that. Unless, of course, a fraud investigator or investigative reporter is looking at his numbers. Continue reading