Overstock.com released its fourth quarter and full year 2006 financials on Monday morning. Total fourth quarter 2006 revenue was down 6 percent from 2005, to $297.5 million. Total 2006 revenue was down 1 percent from 2005, to $796.4 million. Gross profits and gross margins were also down for the year, and the company said it had a net loss of $96.9 million for the year. "Lower traffic was partly to blame and we didn't improve conversion (turning visitors into purchasers) enough to achieve positive growth," Overstock.com CEO Patrick Byrne said in a letter to shareholders.
Byrne said in a conference call on Monday morning that he had operated the company on a shoestring in early years, but that he had, in some sense, "lost the discipline that I had for the first several years of the company" and created an expense structure for a $2 billion company. Instead, the company achieved under $800 million in revenue for 2006.
In talking about the auction platform, Byrne discussed improving sell-through rates, something he had blogged about last week (http://forums.auctions.overstock.com/viewtopic.php?t=16563).
Referring to the auction business, he said, "We made a lot of changes in the fourth quarter, and I have mentioned that two years ago, it lost over $5 million. Last year, it lost a little bit over $1 million. This year, it is already profitable. It has been profitable since December. It suddenly is catching fire, at least in the sense of sell-through rate."
Overstock.com has made significant changes to its auction platform in the last several months, including doing away with monthly subscription plans for sellers (http://www.auctionbytes.com/cab/abn/y07/m01/i02/s01) and terminating its contract with Sellathon, which provided Overstock.com Auctions sellers with analytics and counter tools.
Overstock.com Auctions processed $7.18 million in gross merchandise volume in the fourth quarter 2006, compared to $9.46 million in the fourth quarter 2005.
Overstock.com Auctions processed $28.87 million in gross merchandise volume in 2006, compared to $29.7 million in 2005.
The average registrant acquisition cost for auctions went from $6.73 in 2005 to $0.59 in 2006.
On Friday, Overstock sued some major brokerage firms for $3.48 billion (http://www.auctionbytes.com/cab/abn/y07/m02/i05/s02). BusinessWeek reported that Overstock.com also filed a patent lawsuit against Applied Interact on Friday (http://www.businessweek.com/ap/financialnews/D8N3PN680.htm).
Conference Call Transcript
http://internet.seekingalpha.com/article/26114
