IT Gets Blamed for Overstock.coms Earnings Plunge

By Evan Schuman  |  Posted 2007-02-06 Print this article Print

When reported a weak fourth-quarter earnings report, top management pointed the finger squarely at IT.

When reported a weak earnings fourth-quarter earnings report on Feb. 5 (revenue down 6 percent, gross profits down 16 percent, a $97 million loss for the year), top management pointed the finger squarely at IT. Its unusual for a company to blame a loss on technology management, but Overstock has done it before. "We lost $41 million for the quarter and $97 million for the year," said Patrick Byrne, Overstocks chairman and CEO, in a statement. "We paid the price for hastily implemented system upgrades of 2005 and the subsequent troubles caused by them."
Byrne said the system upgrades—involving the integration of an Oracle database and a Vcommerce database—were partly cursed by bad forecasting.
"We built the infrastructure to handle continued hyper-growth just as it ended. We recognize that the days of hyper-growth are behind us and that our poor execution of the building of our infrastructure contributed to the end of that hyper-growth," he said. "Weve reduced our headcount and weve terminated an expensive computer facility co-location lease. We are in the process of significantly reducing additional facilities lease costs and other expenses." Click here to read more about Overstock.coms technology shortcomings. The CEO did pay one compliment to IT, although it could be seen as slightly back-handed. "The poorly implemented system upgrades that caused so much trouble last year hummed through this Q4, like well oiled machines, and I couldnt be happier about that," he said. Retail Center Editor Evan Schuman can be reached at Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.
Evan Schuman is the editor of's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at

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