Overstock Chairman Chooses Son Over Company

By George Anderson
The chairman of Overstock.com, John “Jack” Byrne, says that, if he steps down from his post after the annual shareholders’ meeting this April, it will be because he’d rather keep his relationship with his headstrong son than become a board chairman elsewhere.
The son in question is Overstock.com’s CEO Patrick Byrne and, as his father told The Wall Street Journal, he’s not sure the younger Byrne is making the best use of his time pursuing what he calls a “jihad” against short sellers.
In August, Overstock.com filed a lawsuit against the Rocker Partners hedge fund and the research firm of Gradient Analytics. The suit alleges the two companies conspired together to publish negative analyses of Overstock.com’s business.
Moderator’s Comment: Do you think that Patrick Byrnes self-described “jihad” against short-sellers is taking his focus off of running the company? What
is your assessment of the Overstock.com business? –
George Anderson – Moderator
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5 Comments on "Overstock Chairman Chooses Son Over Company"
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By recent media and analyst accounts, Overstock.com has far bigger problems than short-selling. Namely, their warehouse operations and customer service have seen a precipitous drop in quality in the last year. Customer complaints detail situations where they either aren’t receiving merchandise at all or are receiving only partial shipments and then having months of frustration trying to get Overstock.com customer service reps to rectify the problem.
One account suggested that the problem is limited to their media warehouses in the Southeast (where CDs and books are shipped), which were severely affected by the hurricanes this fall. However, a Dec. 05 article in the British online publication, The Register, detailed the reporter’s similar firsthand experience with an electronics purchase. If this continues, it spells a dire situation for any retailer. Overstock.com needs to concentrate on restoring its operations and service to its previous excellent level, which, along with its low prices and great TV commercials, helped make it a household name. The lawsuits are an unnecessary distraction from Overstock.com’s core business.
My take is the we either have a “Son knows best” twist where the father is giving way to the more aggressive businessman, or a son who has just bitten off the Silver Spoon. Either way, Jack doesn’t seem to be pushing back so it can’t be hurting the business.
This is a futile struggle waged by a guy who has lost his way. Shorts are part of the market and always will be. Maturity for a CEO is defined in how issues like these are handled.
The CEO at the big “O” has some learning on the agenda or perhaps an exit.
Short sellers wouldn’t be short sellers if the entire management and the board focused 100% of its time and vision on improving the company’s financials. Companies with great financials have enthusiastic investors not enthusiastic short sellers. The most satisfying revenge against short sellers? Improve the financials so the stock price rises and the shorts lose their shorts.