Overstock Cruises in With a Cool 14
My high school French teacher was a hip young guy, kind of scruffy, who related more to us freshman than he did to the other teachers in school. He seemed especially fond of Billy, the class member who—this was a point in time when Led Zeppelin and Alice Cooper were the biggest bands in my school—was a Dead Head.
Billy was not, as they say, always entirely with us even when he was with us—if you catch my drift.
In any event, I couldn’t tell you a thing the French teacher taught us that year, but I do remember very vividly the day he gave us our grade point average just prior to going into final exams.
He did it in front of the whole class—sitting on his desk and reading our approximate GPA out loud from a sheet of paper. He read the list slowly and with great relish, especially when he got to the various knuckleheads among us. I think his point was to let the laggards know how well we had to do on the final in order to pass.
The girls, of course, were all fine—80’s and 90’s and all that. The boys’ grades had a much higher standard deviation, as it were: mostly 70’s and low-80’s, with a couple of 60s in there. Then he got to the Dead Head:
“And Billy’s cruising in with a cooooooool 20,” is how he put it. Everybody laughed, including Billy.
I think of Billy when I look at the Overstock.com “Build Your Own Jewelry” site and monitor the diamond sales.
You remember “Build Your Own Jewelry”—the web site that was going to “dominate” the $2,500 to $5,000 engagement ring market, according to blustery Overstock CEO Patrick Byrne.
And, of course, you recall the $7.5 million diamond “steal of a lifetime” Patrick made to stock the site on the spur of the moment in late 2004 with some unidentified partners in an off-balance sheet vehicle established months prior to the sudden transaction with desperate diamond sellers who apparently didn’t know the value of their satchel of stones…which he could “flip” for an immediate $1 million profit or “dribble out” via the web site for a $3 million profit…
Well, the dribbling is not happening, according to my monitoring of Overstock.com.
Since the 38 diamonds disappeared en masse the first week of April (see “The Mystery of the 38 Diamonds” on this blog), out of nearly 2,800 stones available to all comers on the “Build Your Own Jewelry” site, a cooooooooool 14 stones dribbled out during the remainder of the second quarter.
And only 3 of those 14 were priced above $2,500—the price point at which Overstock was going to begin its “domination” of the online jewelry business.
No doubt in the upcoming second quarter conference call, Patrick will shine the spotlight on something besides “Build Your Own Jewelry.” I have no idea what, because the auction site is not happening, and the company was barely mentioned in last month’s Wall Street Journal article on eBay’s problems (Amazon ranked more highly as an eBay competitor)…but diverting attention away from the losers is Patrick’s standard M.O. and it seems to work well with Wall Street’s Finest.
For unlike my French teacher, who publicly shared the failings of poor Billy, the Dead-Head underachiever, with the rest of his classmates, there’s apparently nobody willing to discuss Patrick’s failing grades in front of the class.
Jeff Matthews I Am Not Making This Up
The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.