IT Gets Blamed For’s Earnings Plunge

Written by Evan Schuman
February 5th, 2007

When reported a weak earnings fourth-quarter earnings report on Monday (revenue down 6 percent, gross profits down 16 percent, a $97 million loss for the year), top management pointed the finger squarely at IT.

It?s 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,? Patrick Byrne, Overstock?s Chairman/CEO, said 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. ?We?ve reduced our headcount and we?ve terminated an expensive computer facility co-location lease. We are in the process of significantly reducing additional facilities lease costs and other expenses.?

The CEO did pay one compliment to IT, although it was 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 couldn?t be happier about that,? he said.


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