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[Patrick Byrne]

Congratulations on the great progress you have made defrocking some high clergy of Wikipedia since I last visited.

Full disclosure: My name is Patrick Byrne. I work at Overstock.com, which for about one year has employed a former journalist named Judd Bagley to oversee the creation of our car tab and a Wiki called "Omuse," handle relations with the press, and design a new tab (in the works). Long before Judd joined our company, and as a hobby since, he was analyzing techniques employed by a small group of people to hijack social media. Using the handle "Wordbomb" he posted the results of his analysis on this site and on a site he created called "antisocialmedia.net" (for the record, he did not tell me about antisocialmedia.net before he did it, nor for some time after its creation would he confirm that it was he who was behind it). In your admirable endeavors to unscramble what is going on behind the scenes at Wikipedia, Judd/Wordbomb has done his share of work. By a strange coincidence (?), one of the people whose pefidy this community has uncloaked, Slim Virgin, turned out to be a woman from my own past, and I posted elsewhere on this site such information as I thought might be helpful to you (which Mr. Brandt seemed to appreciate). I say this all in full disclosure because the financial press labors to find any incompleteness in my posts on the Internet, apparently finding something unholy in my exercise of first amendment rights without availing myself of (or recognizing the need for) their services.

Now to my point: Nothing is more irritating, I know, than to have someone suggest to you that your own cause is really part of a bigger struggle. One always suspects an attempt to divert one's energies into whichever other cause that speaker favors. So I insist that I seek no diversion from your own current, noble, efforts, when I suggest to you that the threads you are pulling here lead deeply into the heart of a financial scandal that has been percolating into the headlines for six months, and may swamp any financial scandal of our lifetime.

On another message board within Overstock.com I have begun synthesizing information about that scandal, starting by creating one concise, cohesive overview post. Rather than gum up this board with information about that other financial scandal, I will give a link to that overview post: HOW THE SYSTEM REALLY WORKS: INTRO

After you have read that you will wonder if there is independent confirmation of what I wrote there. There is a great deal, and organizing it will be the subject of my subsequent posts. In the meantime, however, consider taking 25 minutes to watch a Bloomberg Special Report, "Phantom Shares". Bloomberg has the most "elite" viewership of any news organization in the world (which may count against it in the eyes of some radicals, I know). Consider what it means when a news service at the pinnacle of the Establishment reports that our capitalist model is powered by a reactor that almost no one has heard of, and that this reactor that has a crack in it (and why it is that only such an elite news service could run that story).

Given my earlier involvement on the Slim Virgin issue, I hope that Daniel Brandt and you will forgive what may seem like a commercial interruption. I simply wish you to understand how what your are confronting here really is part of a larger puzzle, so that you may know the stakes riding on your efforts.

Warm regards,
Patrick M. Byrne
CEO, Overstock.com

[Pwok]

If someone is short-selling shares that haven't been borrowed, then I agree with CEO Byrne that there's a legitimate complaint. It's a fraud on the market, and like other frauds it ought to be pursued and the perpetrators punished. That said, I'm skeptical that this is a system-threatening problem. I think there are far more important problems out there than this one. And, once more, if Overstock wasn't doing so badly, attacks by short sellers wouldn't particularly matter.

As for your company's financial performance, it would take me quite a bit of time to analyze Overstock and its industry. That said, most of your positive OCF in Q2 came from increased current liabilities. In other words, you stretched out your payments. Oh, and you sold off a bunch of inventory without replacing it: probably the stuff you'd written down in previous quarters so you could make your gross margins look good in Q2. But your revenues were down significantly from the same period a year earlier; it would seem that customers aren't exactly flocking to Overstock.com, now are they?

I don't know what the difference is between the base business and your "fulfillment partner," and I'm not sure I want to because something tells me it's where a lot of sins are hiding. Please don't tell me that there's a red stripe painted in a common warehouse and that everything on one side of the line is theirs and everything on the other side is yours. The possibilities are endless. We'll let the SEC's folks handle that one. Should make for good reading.

So what do you do exactly, Mr. Pwok? Are you a broker, pension-fund administrator, accountant, auditor, or what? I knew we had active stock traders and such on the board, but you seem to be considerably more advanced in the profession than the others, at least the ones I know of...

I'm retired. I did a bunch of things. Enough to know that American business on parade would look like the cast of the movie Freaks. In my first financial position, on the first day, the first thing I heard from the most experienced people was: "Never believe corporate management. They always lie." I remember being taken aback by the cynicism. Five years later, I was singing the same tune. You could still make money on the stocks, as long as you didn't believe what you were told. I listened to conference calls for comic relief.

Could we put the AOL people in jail anyway?

Depends on what you mean by "we."

I wasn't aware that Utah had such a reputation... can you come up with any sources to back that up?

I'm not asking you to believe it. If you want to do business with Utah-based companies, be my guest. It'll be your funeral. Let's just hope the U.S. doesn't stick that Utah export to Massachusetts, Mitt Romney, in the White House. If you think Bush has been a disaster, by the time Romney and his cronies get through with us, there'll be nothing left.

Either way, you've got to calm down.

No, I don't.

Mr. Byrne here is an employer, and my assumption has always been that it's as an employer that he's on this "crusade" against naked short selling. Or are we saying that the jobs of hundreds of workers are of no consequence?

CEO Byrne is pissed about his stock and his stock options, and because he's pissed then by God it's the biggest issue in the whole world because he's a CEO and he says so. And he probably got leaned on by his board of directors, too. And if Overstock is like a lot of other companies, the stock getting clobbered probably screwed up his strategy of underpaying employees in cash and instead giving them shares. He might have been facing up against the issue of having to pay a living wage in dead presidents. O! The horror!

But not a single job at his company (except maybe his own) is at risk from naked short selling. Again, short selling has never been my game, but if I had a buck for every CEO who blames his failures on short sellers, I'd be even better off than I am now. Folks, it's the oldest excuse in the book. If other, more naive people on this board want to swallow that one, go right ahead, but I'm telling you that when I was in the finance game we laughed at CEOs when they went on a tear against the shorts. Study after study will tell you that the shorts usually get it right.

Seriously, I'm here to tell you it's a steamin' crock o'shit. CEO Bryne is painfully typical of the CEO breed: it's always, always, always someone else's fault. Always. Look, I know that it sounds like I've got an ax to grind against his company and/or the stock. I don't. I couldn't care less about either one. Never thought much about them before today, except to notice the hot women in the ads telling us that it's all about the "O." I've always wanted to say, "Sweetheart, you got that one right." CEO Byrne, you picked a good ad agency. Soft-core through and through, but who can possibly object?

Anyway my issue is with smarmy, maniuplative corporate executives. Caveat emptor! Now, would anyone like to know what I really think?

This post has been edited by Pwok: Sun 2nd September 2007, 6:45am