"We definitely came off the rails last August with our [computer systems] fiasco, and it will take to the end of this quarter to get that all fixed," the founder of the online closeout retailer said Wednesday. Investors "have seen us stumble, but we're getting up."
The double-whammy of the tripling of technology-related costs to $28.1 million in fiscal 2005, coupled with unexpected failures in key systems during the Thanksgiving-Christmas shopping period, contributed to Overstock's net loss of $24.9 million for the year. That was almost quintuple fiscal 2004's losses.
But during a shareholders meeting in Salt Lake City on Tuesday, Byrne and other Overstock executives said recovery from those setbacks is nearly complete.
"By the fourth quarter we will be profitable, and from there on . . . we should be out of the danger zone," said Byrne, whose company is to release its first-quarter results on Friday.
Shareholders, who went on to re-elect Byrne to the company's board with 99.5 percent approval, also learned that he had surrendered the presidency and returned to the chairmanship - a role Byrne had relinquished to his father, insurance magnate John "Jack" Byrne, last October.
The elder Byrne had long talked of stepping down. Instead, in an apparent compromise, he was named to the new post of deputy chairman. Patrick Byrne said his father's role would be as his top adviser.
Earlier this year, the two had clashed over the amount of time Patrick Byrne was spending on a public campaign against alleged market manipulation through "short selling" - the practice of borrowing stock, gambling on a share price decline, and then banking the difference.
The elder Byrne could not be reached for comment Wednesday, but any rift appeared to have been healed at the shareholders meeting, where he introduced Patrick Byrne as "my precious son," and exchanged good-natured quips with his offspring.
Jason Lindsey, a former chief financial officer and president of Overstock and onetime CPA with PricewaterhouseCoopers, agreed to come out of retirement to serve as president and chief operating officer.
Although the shareholders meeting focused on Overstock's efforts to recover from its late-2005 setbacks and reach profitability this year, there was one brief exchange over hiring and compensation issues. (Partners comprise 500 retailers who buy goods from Overstock).
A shareholder complained about how employee turnover had affected partner management. He said he had worked with five new managers in as many years, a development he blamed on "mediocre compensation."
Overstock officials, while acknowledging partners had borne their share of frustration during the 2005 crisis, assured shareholders that they were trying to improve compensation and use their best managers to deal with partners.
Investors on Wednesday gave Overstock a modest thumbs up, pushing the company's stock to a $28.54 per share close, up $1.14, or 4 percent.
bmims@sltrib.com
