By Alexander MoschinaSince the beginning of 2011, Overstock.com (Nasdaq: OSTK) shares have been in freefall. From a price around $25 in May 2010, the stock now sits at $16. Fortunately, some strong fourth quarter results have helped the company rally recently. But is an encouraging earnings report enough to spark a much-needed uptrend? Let take a look… Overstock Skipped Christmas… And the New Record of Rosetta Stone German
Spending On the surface, Overstock had a great 2010. The first quarter was a blowout, with revenue up 42% from the year prior. And for the year, sales grew 24% to $1.09 billion. For the fourth quarter, however, sales growth slowed to just 8%. According to the company, it chose not to heavily promote its BMMG (books, movies, music and games) and consumer electronics products during the holidays. In hindsight, that was a poor idea, given that considering U.S. consumer electronics sales rose 21%. Plus, overall online retail sales hit their highest levels since 2007, according to research firm comScore. Some of the best-performing categories? Books, movies, music and games. Gian Fulgoni, comScore chairman, said the season set a new record for spending at almost $31 billion. Oops. Of course, hindsight is 20/20, but I’m guessing that Overstock will embrace holiday advertising this year in a bid to get a larger piece of the online retail market. Unfortunately, advertising may soon be the company only hope. Because Google (Nasdaq: GOOG) is about to decimate Overstock search traffic… Overstock Learns the Hard Way That You Don Mess with Google While the web number one search provider isn technically blacklisting Overstock.com, potential customers are going to have to scroll down a learn spanish
bit to see the retailer links. And that could be devastating for the company, which used to rank at or near the top of search results. So what happened? Overstock violated a Google policy, which prohibits companies from artificially boosting their site ranking. The company was offering a discount to university students and faculty, meaning its links would appear on educational sites ending in .edu. And because Google displays these sites first on search results pages, Overstock.com links were also coming up first. It complicated. But the bottom line is that Overstock stacked the deck and now it paying a hefty price. After all, Google marketshare of the search engine world is 65%. That a lot of prospective customers for Overstock to lose. In the short term, the company shares will ride on the coat-tails of its positive earnings. But longer-term, as it realizes just how much of a hit Google is dealing, don be surprised if Overstock slips once again.Disclosure: Investment U expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees and agents of Investment U Rosetta Stone Chinese
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