Overstock.com sees huge growth

Next week, Patrick Byrne plans to travel to a Persian Gulf state with a $1 million cashier's check to get in on a "killer" deal on mostly diamond jewelry.

Byrne hopes to get to the seller, a rich sheik closing his jewelry boutique, before anyone else. It's how he buys merchandise, always on the lookout for great deals for his Internet business, Overstock.com.

The Salt Lake City company may be on the verge of making money after two years of rifling the pockets of dying retailers and reselling name-brand goods ranging from furniture to golf clubs.

Overstock said it cut losses to $274,000 for the third quarter, or 3 cents per share, from $3.8 million for the same quarter of last year, or 35 cents a share.

"I think it's about to go positive," Byrne said Thursday of company earnings.

Overstock is riding triple-digit growth in merchandise sales and "we tend to explode every fourth quarter," the chief executive said. "The cool thing is, we don't really shrink back" after the holiday season.

Merchandise sales were $38.4 million for the third quarter, up 145 percent over the year-earlier period.

Overstock, which went public last spring, also made its first operating profit of $115,000.

Byrne says it's taken less than $50 million to launch Overstock, while Amazon.com has burned more than $3 billion to get to the point where it lost $35 million in the past quarter.

He likes to make the comparison since Overstock beefed up its selection of books and DVD titles. Overstock plans to carry 100,000 titles within weeks, up from 20,000 on Thursday, at prices Byrne says are half those of Amazon.com.

Byrne says Amazon.com is watching Overstock closely, trying to match some of its low-ball prices. He welcomes the competition, telling investors in a conference call this week, "They're bringing a knife to a gun fight."

Repeatedly, investors tried to pin Byrne down on projections for sales growth, but he shrugged it off each time.

"Wall Street likes nice, predictable business. They want me to predict, and I have no idea other than: We're going to have a lot of growth," Byrne said.

Chief financial officer Jason C. Lindsey says Overstock is an opportunist: If a truck overturns on a highway, Overstock's buyers will scramble to salvage the goods. The buyers are on a first-name basis with insurance adjusters.

"There's all kinds of inventory bobbing around on the Pacific Ocean right now" because of a work slowdown at major West Coast ports, Byrne said.