Overstock.com (OSTK) announced a layoff of fifty workers last week. Now that's just three percent of the workforce, really no big deal. After all, for a company suffering financial difficulties, what else do you expect?
What's interesting, though, is how the reports of the layoffs conflict with management's previous statements on the subject.
The Salt Lake Tribune reported:
“Every year around this time we look at our operations and our head count and figure out what our staffing needs are forward,” said President Jonathan Johnson. “We’ve been in business 12 years, and most of those years we’ve let some people go around this time.”
Johnson said much the same thing to the Deseret News:
"We've been in business 12 years and we've probably done this six or seven times," he said. "This is just really to try to make sure the business is 'lean and mean' and feels like it’s the right size."
What neither newspaper pointed out was that Johnson said the exact opposite a year ago:
"We've continued to grow and so we haven't had layoffs like other companies may have," said Overstock president Jonathan Johnson. "And I think that probably contributes to good morale."
So which is it? Have there been layoffs in the past or none? Neither newspaper noticed, naturally.
A Utah blog, meanwhile, reports that Overstock's Provo office, opened with great fanfare a year ago, has just been shut (perhaps resulting in the layoffs; that's not clear). If that's true, you can bet that it won't be reported by the Deseret News and Salt Lake Tribune -- not unless Overstock has issued an appropriately spun press release.
The layoffs, and the company's continued financial travails, were probably the reason Overstock.com shares hit a new 52-week low on Friday, when it closed the day's trading at $6.99. It would have sunk a lot lower if Francis S.M. Chou, operator of a mutual fund group bearing his name in Canada, hadn't bought 50,000 shares -- a nice chunk of the 183,000 shares traded that day.
Chou is being killed in this stock, no question about it. He currently owns 3,260,738 shares of this dog's breakfast of a company, so his losses are substantial. I don't understand what Mr. Chou sees in Overstock, especially when there are far more viable alternatives: Amazon.com (AMZN) and Blue Nile (NILE) among the internet retailers, and Wal-Mart (WMT) and J.C. Penney (JCP) among the brick-and-mortar chains. Each has its disadvantages, and Wal-Mart is an ethically challenged company in its own right, but none are sliding into the toilet the way Overstock is. It's a puzzlement.
True, the company might be considered a "value" stock. But what about its history of accounting issues and its recent flirtation with insolvency?
To add insult to injury, just as the stock price was tanking last week, Overstock management decided not to annoy shareholders very often with dull stuff like executive compensation:
As revealed in an SEC filing the other day, Overstock disclosed as follows:
Consistent with the stockholders’ advisory vote on this matter, Overstock intends to hold future stockholder advisory votes on executive compensation once every three years until the next required vote on the frequency of stockholder votes on executive compensation.
Indeed, Overstock shareholders did go along with management's "recommendation" that executive compensation not be considered by shareholders except for once every three years. (Let's face it: It's not clear Overstock will even be around in three years.) While it's true that management "recommendations" are almost always ratified by shareholders, responsibility ultimately lies with the shareholders themselves.