elgato
Joined: 24 Feb 2005
Posts: 17240
Location: Texas
|
| Posted: Thu Nov 03, 2011 1:26 pm Post subject: Overstock.com Nears Default While Utah Media Sleep |
|
|
The always-intriguing story of Overstock.com (OSTK) ratcheted up a notch on Monday, as word emerged on Sam Antar's blog that Overstock is on the verge of violating its debt covenants and is therefore close to default. This devastating news was buried in a footnote.
That's probably the best example I've found of the need to read the footnotes of financial statements. Significant news is often buried therein. In this case, the news is so significant that I wonder if perhaps there may be a disclosure issue, and that Overstock should have issued a public disclosure highlighting its flirtation with bankruptcy.
Among Sam findings, just from reading the latest 10-Q, is that Overstock is juggling the books:
At the end of its third quarter, the Overstock.com had $18.4 million of net working capital (current assets minus current liabilities). However, the company would have reported a mere $1.4 million of net working capital had it not played a shell game and window dressed its balance sheet during the third quarter. Apparently, the company wanted to avoid reporting dangerously low net working capital going into the fourth quarter, while at the same time it is trying to renegotiate terms of its Master Lease Agreement (sale leaseback) with U.S. Bank.
One thing I find especially interesting is the utter indifference to all this by the local Utah newspapers, especially the Salt Lake Tribune and Deseret News and the local Associated Press bureau, which seem to view their role as that of extensions of Overstock's public relations department. Not a word has appeared in the local newspapers about the company's third-quarter financial woes, the libel suit against its CEO Patrick Byrne, or the downgrade that led to a sell-off in the stock on Friday.
http://seekingalpha.com/article/303750-overstock-com-nears-default-while-utah-media-sleep?source=yahoo |
|
