Overstock.com has been in the domain news quite a bit recently for its acquisition of o.Co as well as considering changing all of its non-US sites to o.Co.
Overstock was back in the news yesterday, but the news was not good.
The lawsuit cites an example where Overstock allegedly advertised a patio set for $449.99 and claimed that the “List Price” for the set was $999. But when the furniture was received by the customer it had a Wal-Mart sticker showing the price to be $247.
The complaint accuses Overstock of often making up “list prices” and “compare at prices.”
“In our opinion, this conduct constitutes untrue or misleading advertising, and legal action is necessary to protect our consumers from such practices,” District Attorney Dolores A. Carr. said in a statement.
“Overstock.com stands by all our advertising practices, including providing comparison values which we thoroughly explain on our site,” Jonathan Johnson, President of Overstock.com said in a statement. “We have been singled out for standard industry practices, which we look forward to demonstrating in court.”
Last week Overstock reported earnings which were well below estimates reporting a Q3 2010 $3.381 million loss, $0.15 per share compared to a Q3 2009 reported loss of $1.379 million or a loss of $0.06 per share.
Overstock.com’s reported loss of $0.15 per share was five times greater than analysts’ expectations of a $0.03 per share loss.
Shares of Overstock.com tumbled $2.46 per share or 15.5% lower to close at $13.41 per share after reporting earnings, however shares of Overstock actually closed up $.25 at $13.86 after the news of the lawsuit in trading on Friday.
‘Everyone’ does it, but I’m glad they’re cracking down.
The MSRP have gotten ridiculous
As I saw all the excitement over Overstock and their purchase and branding of O.com all I could do is cringe. It is as close to the old dot com bubble as you get. A failing company with no hopes of profit trying to take away the focus on the bottom line by trying to appear trendy and cool. They have virtually no chance of turning a profit in the near or long term and they spent money on o.co they should have put towards other segments of their business. It’s like rebuilding a perfectly good sign when your storefront is falling apart.
off topic … the GoDaddy x.co short-URL service seems, disappeared from the web
This is a pervasive practice. They are just making an example of Overstock. Not really earth-shattering.
Emjohn
Not earth shattering unless millions of people that weren’t aware of this practice are aware of it now
MHB,
True. I guess there are a lot of people that wouldn’t know. I guess something should be done to rectify the situation. People like me have, unfortunately, accepted it as a fact and something quite difficult to monitor.
Shane,
Overstock reported for the first two quarters of this year:
Net income was $2.38 million compared with a net loss of $3.6 million in the prior year.
It appears their income has been fluctuating. I don’t quite understand what you mean by “they will never make a long-term profit”. That’s a REALLY speculative statement.
There’s also a moron spammer that has the “DomainsPriceWorldRecord.com 99.9% OFF” or the greatest deal of all time. Instead of totally wasting $16,000,000 on a totally useless name, now you can buy it for $16,000+.
What a deal!
einstein, I’ll go half on that with you. 🙂
I agree my statement is both opinionated, speculative and probably not true. I’ve been following them for many years and I seem to always be disappointed with their results. My final straw was when Patrick Byrne accused all the hedge funds of picking on his stock when the big O became one of the most shorted stocks in all of trading (I was one of those guys that was short) . It’s no longer heavily shorted and revenues have improved. I guess I just don’t like Byrne.
Shane,
that manipulation with stock happens that much is clear, just ask Jim Cramer that was stupid enough to admit to doing it on tape. See
seekingalpha*com/article/30257-jim-cramer-admits-to-stock-manipulation-when-at-hedge-fund
The same happened with SIRI and quite a few other stocks.
Why are you mad at Byrne? You are a short, he and many other are /were long on the stock. Kinda dumb of you to get mad at a large shareholder /CEO for that, especially if he had some evidence. Let the stock e priced without naked shorting, rumor spreading and other tricks.
We’re off topic but naked shorting should be illegal, that’s why I was happy as hell when many hedge funds got BURNED with Porsche to the tune of billions of dollars.
In the UK now, companies advertise ‘discounts’ on products which are new to them. For instance, they might be having a pre-xmas sale on a range of sofas with a sticker price of ‘half price – just£999’ – the small print which is flashed onto the bottom of the screen says ‘after-event price £1999’. Of course ‘after-event’ you couldn’t get one anyway as they don’t stock them. They’re claiming ‘half price’ for an item they never sell for ‘full price’ except on paper – I’m sure they’d claim 90% off ‘after-event price £10k’ if they could get away with it.
If you didn’t already know overstock doesn’t actually have stock! It’s all distributors, they make you say its from overstock to protect that image. It’s all a bunch of BS, but what’s funny is they always manage to sell the product for more than most online dealers, then they rake in the difference.