Patrick Byrne, Chairman and CEO of Overstock.com

This is a rush transcript from "Your World with Neil Cavuto," December 7, 2007. This copy may not be in its final form and may be updated.

TERRY KEENAN, GUEST HOST: My next guest stands to make a bundle, as everybody is bundling up and doing their shopping over the Internet.

Patrick Byrne is the chairman and CEO of Overstock.com.

And welcome, Patrick. Good to have you with us.

PATRICK BYRNE, CHAIRMAN & CEO, OVERSTOCK.COM: Thank you, Terry. Good to be here.

KEENAN: OK.

I know I am going to be shopping more online, especially with these temperatures, because we are having a cold winter compared to the last couple seasons.

BYRNE: Think of all the money you will save.

KEENAN: Do you have a direct correlation between your business and the weather?

BYRNE: Very much so.

A good winter snow means people start shopping online instead of going to stores. Also, something funny happened. We had such a warm fall that, normally, Macy's and Nordstrom's, they get their fall stuff in August. And then, on Columbus Day, they reorder. Well, their reorders were very light this year, which meant the manufacturers were stuck with stuff.

They called us. It is the first year that we have in Overstock the same stuff that is currently in Macy's and Nordstrom at half the price. KEENAN: So, Overstock is overstocked this year.

BYRNE: Yes, exactly.

KEENAN: So, it's worth going on.

You know, your stock has held up pretty — you are smiling, because it has had a rough couple months, but compared to Wal-Mart, which has flatlined this year, your stock has done pretty well. How come?

BYRNE: Well, we're up about 50 percent for the year.

(CROSSTALK)

KEENAN: Yes, that's pretty well.

(LAUGHTER)

BYRNE: I never try to figure out too closely what is driving the stock. I think there's actually a lot of games and manipulations being played in the stock — and, actually, I never encourage people to buy it, because I think it's heavily manipulated.

(CROSSTALK)

BYRNE: Yes, it's a heavily manipulated stock, and it's probably not for the retail investor.

KEENAN: OK. But you are looking at a strong season anyway?

BYRNE: Oh, yes, we're having a — we are doing fine.

KEENAN: What are some of the hot items over Overstock this winter?

BYRNE: Well, first of all, candidly, we never had a very good electronics department before this year. We have built a good one this year. It is growing very quickly.

Jewelry and especially diamonds. We have these conflict-free diamonds. And we're having this huge surge in diamonds. And then the other one, apparel, because of that effect I described...

(CROSSTALK)

KEENAN: It always surprises me that people would buy diamonds on the Internet. But I know it's a booming business.

BYRNE: You get twice as much as diamond for the money. You can get her twice as big a diamond for the same money.

KEENAN: You know, we have seen a spate of mall shootings, unfortunately, two this week. Is that driving traffic to the Internet as well? Do you see any correlation? Or is that too a big...

(CROSSTALK)

BYRNE: I don't want to say, because I don't want anybody trying to say that I am trying to make hay out of that. So, I am not going to comment on the mall shootings.

KEENAN: OK. So, you might not see too much of a correlation.

Also want to ask you about what is going on in the mortgage market, and we have seen a lot of record, indeed, foreclosures, people cutting back.

And I know that you sell a lot of items for the home. Have they been weaker than your other products?

BYRNE: Actually, no. I do think that our furniture business is fantastic.

KEENAN: Really?

BYRNE: Great corner of our business.

I do think that we are in — I have been saying for about two years we're looking at a 1929 kind of event. I think that we are really in trouble in this country. And what you have seen in the last four months is just the beginning of it.

KEENAN: Wow.

BYRNE: The government has been keeping the economy afloat with flooding us with cheap money. And those days are over. The dollar is cracking. Eventually, they are either going to they have to defend it by raising interest rates or something. But we're looking at a very bad economic situation.

(CROSSTALK)

KEENAN: But, so far, you are not seeing it. But, of course, you would probably be the last place to see it, since you are selling such discounted items.

BYRNE: If anything, we are counter-cyclical. In good times, it is — we have — it's toughest to get overstock. In bad times is when, suddenly, everybody is calling us to unload product.

KEENAN: All right, thanks, Patrick.

BYRNE: Great, Terry. Great to see you.

KEENAN: Patrick Byrne, CEO of Overstock.com.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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