Everyone knows that, over time, the Internet is grabbing market share from brick-and-mortar retailers. Home shopping (or let's face it, office shopping) is becoming the 21st century's reality.
Given that it may be strange to see two such companies, ValueVision Media (VVTV) (known to the public as ShopNBC) and Overstock.com (NASDAQ:OSTK), the Internet retailing site, on the current list of lows.
But there are reasons. And there are also reasons to see them leaving the list soon.
VVTV is a me-too company (the industry is led by QVC and HSN) that warned around Halloween that Christmas was not coming this year. The stock initially crashed over the summer as its top supplier liquidated. Meanwhile, its rivals seem to be going from strength-to-strength, HSN trading near its 52-week high. (QVC is privately held.) Both insiders and institutions have been dumping VVTV.
But there is a bullish case. CEO William McGrath was highly-respected at QVC. It continues to enjoy wide distribution on cable, satellite and through mobile devices. It's still using the NBC brand name. They're continuing to recruit celebrities like Carson Kressley to sell there and they are retaining staples like jewelry designer Charlie Lapson.
One thing about home shopping, especially TV shopping. Bloggers love to dish on it. And here's a key blog post about VVTV. Their agreement to use NBC Universal brands expires in May. So if you think that will be renewed, or NBC Universal will take a greater interest in the company, it's a buy. If NBC drops them, you should too.
OSTK is a different story.
The company was founded by Patrick J. Byrne, whose dad John J. Byrne built GEICO and was called (by Warren Buffett) his "Babe Ruth of insurance." Maybe that makes his son the Mario Mendoza of retailing.
Byrne's operating record is poor. Shares peaked in late 2004 and have been sliding down irregularly since. It It has had a slightly profitable bottom line for 2009-2010 (2011 numbers are eagerly awaited) but top-line growth has been modest. Byrne's efforts to go after Wall Street for this have been unavailing.
While Overstock originally sought to compete directly with Amazon.Com, a sort of Gimbel's to Amazon's Macy's, it never really did. It was known, early on, for its TV commercials, but now it can even be hard to find online, thanks to some over-the-top search engine tactics.Its best recent idea may be O.biz, a b2b bulk purchasing site.
Despite all this, Zack's recently raised their view of Overstock to neutral, apparently because they think it's been beaten up enough. If the senior Byrne, who rejoined the board in 2010, were able to do something about his son (even to retrieve his fortune) the company might become interesting. But Weiss calls that unlikely.
Leave Overstock in the bargain bin. Sometimes there are good reasons for stocks to hit new lows.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.