Overstock.com, Inc. (OSTK)

HollywoodDan (95.64) Submitted: 12/05/06 10:59 AM

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Hey Invertimenor,

Sorry I missed your response. All I meant with my spreadsheet crack was that I continue to see something in Fooldom - exceptionally intelligent folks like you who are good with numbers and growth rates, and in my opinion miss the more important stuff - like quality of management, quality of the actual products and services sold, analysis of the competition and moat. I think your analysis of what makes a great CEO and what constitutes a strong moat are weak and if you're managing other people's money, that's a a major problem. Though I may feel like I'm out to hurt your feelings or the like. I am not. I am trying to give you the straight talk I think you need to improve your game, which is obviously very strong for your age and strong for any age.

Patrick's own press release read:

"The Q3 financial results were poor." Seth Jayson's critique of them is dead on in my book...

http://www.fool.com/news/mft/2006/mft06110656.htm

It's laughable that you say I am "biased" about them and "spewing venom." I sold my shares in the 40's, posted my thoughts on the OSTK board and turned out to be exactly right. I have acknowledged many times that Doc Byrne is exceptionally brilliant, that I used to be a huge fan (so much so that I once emailed him an idea for an Overstock TV Game Show, and said I trusted him so much he could pay me whatever he wanted if he used it. Of course, he did not!) I believe PB is a truly great man and that Worldstock is an amazing thing. I also believe he truly believes what he says. I think the brand is impressive, and the achievements you note are all great accomplishments. He built a Super Bowl contender - but I believe he will never take home the title. Also, to suggest I am "biased" implies something unseemly and in light of PB's brutal accusations, which include falsely accusing TMF of being "completely corrupt" on a penny stock pitching Web Site is disappointing. PB is the one who spews venom in my opinion. I try to help Fools invest in quality stocks, to avoid crapola, and to have fun doing it. I have never been more accurate than I have with OSTK. Numbers don't lie.

Again, I do agree that there are some fine qualities to this stock - if not I wouldn't be interested in it. Customer service, brand recognition, operational efficiency to name a few. However, I think you're failing to consider:

Executive defections - can't kick ass long term when people flock out of the company and you gotta ask yourself why people leave if this is going to be a long term home run.

PB's belief that a conspiracy is underway to steal his stock and that the US government has corrupt officials looking the other way. If he's wrong, it's pathetic. If he's right - who wants to own a stock under attack!?

There is virtually NO MOAT - none, nada, poo poo, caca. Wal-Mart, eBay, Target, Best Buy to name a few of the MILLIONS of companies out there sell the same things OSTK sells and OSTK is not selling it for that much cheaper. Granted, their customer service seems to do a good job, but that's not enough of a competitive advantage. There's virtually nothing you can buy on OSTK that you can't get anywhere else.

PB lacks focus. Auctions and Travel are downright idiotic. Have you viewed the Big O's Auction message boards lately? People frequently refer to being unable to make money and there is a recent post from PB scolding posters for attacking his workers. In his post he implies that he started OSTK Auctions to help small business people find an alternative to eBay. Once again this proves he is a man who values doing good in the world more than making money. For this reason, I believe he would be a PHENOMENAL head of a charitable organization or non-profit. I think he may be one of the most genuinely brilliant and passionate defenders of the downtrodden on the earth. I also find him exceptionally courageous. I just think he has a major anger management issue and allows his rage at injustice and authority to cause him to make bad decisions and see enemies that either don't exist - or that he created with his fury. I'm not an "enemy" of his but I have lost tremendous respect for him. You either fight NSS or you run a company. And his claim on that penny pitching Web site that he is trying to keep the issue of NSS separate from OSTK is ludicrous. His company was obviously advertising on that very site.

Overstock grew revenues exponentially when they had WAY less competition. A couple of years ago is like decades in Internet time. My main beef with PB is that i believe his crusade will ultimately have ruined the advantages he built up and that his lack of focus virtually guarantees they won't whoop the market.

PB shows me much much more passion for discussing philosophy, history, current events and politics than he does for creating a great business. This is a dealbreaker for me right there as I demand my CEO's have their #1 passion in their businesses - like Reed Hastings or another interesting rebel CEO - Bob Parsons of GoDaddy.

Lastly, I do acknowledge the successes he PB has had. I agree with Jason Lindsey who said that "There's a great company buried in here." But by the time they dig it out, if ever, they will be history. I just read a great Fortune piece about the CEO's of GE and P&G - Jeffrey Immelt and AG Lafley and the word that came up again and again - as it does with the great companies I find in Fooldom - FOCUS.

They don't have it. And that's why they're not going to be around as a public company in five years or less. Any bias I have against OSTK comes from watching PB make a fool (small f) of himself on our very message boards - calling one poster a "poodle" and my hero Bill Mann "a liar." All I see again and again in the news is that companies are slashing prices. I remember a time when PB was going to make that his key competitive advantage. You don't hear that any more. Now it's customer service. Sorry, but ordering stuff on the Internet and getting it is par for the course. I really don't need some sales associate to start IMing me as I'm looking at a photo of a watch.

The great thing about the Market is that ultimately either the Bulls or Bears on each stock get to be right. You like this company a lot. I think it stinks. We'll see who is right.

Best,

BD

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