"Our business is dramatically improving."
Bold words from a man who runs an online retailer that burned $58 million in cash on revenues of $158 million. But then we're used to bold words from Patrick Byrne, CEO of Overstock.com
Part of Overstock's "dramatic improvement" was an 11% year-over-year drop in revenues. Probably not the improvement that believers of the Overstock growth story were looking forward to, but there is a bright side to the figures.
The increase in gross margins and profits -- 270 basis points and 7%, respectively -- bodes well for a company that aspires to stop burning cash quite so quickly. Net cash burned by operations came to $58 million, which, to be fair, is an improvement on the $73 million torched in the prior-year period. But how dramatic is it? And can it continue?
As I've pointed out many times, Overstock is waging a losing battle against the likes of Amazon.com
In the end, this is a mostly moatless business, which means the competition must come on price, or brand recognition, or service. Overstock's drop in revenues looks like a pretty good indication that it's not able to compete on that playing field. Where's Overstock's advantage? That's the question investors need to ask, and then soon after, they need to ask, "How much do I pay for a money-burning business with no moat?"
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