It's All About the O

This is a partial transcript from "Your World with Neil Cavuto," February 8, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: Nothing bogus about online auction site eBay, planning on lowering some of its fees that it had recently hiked, but does it worry one of its top competitors that had been benefiting from all of this brouhaha?

Let us ask one Patrick Byrne, the chairman and CEO, who will ring tomorrow's opening bell at the NASDAQ. He was one of my favorite chapters in that little book I wrote about his own personal ordeals.

Good to see you, Patrick. Thanks for coming.

PATRICK BYRNE, CHMN. & CEO, OVERSTOCK.COM (OSTK): Thanks for having me back, Neil.

CAVUTO: Let's talk a little bit about eBay. I don't understand what happened. They hiked their fees on merchants, right? And then they lowered them, but then what happened?

BYRNE: Well, I think the lowering has been cosmetic. And it just tells me that we're doing something right. As you know, we launched a competing site four months ago, which is heresy. Everyone thinks no one can ever compete with eBay.

Well, every year they've been, since they have the stranglehold on the industry, every year they ratchet the fees up and every year the sellers have to take it. This year, they have a place to defect.

And because so many in the last couple of weeks have been defecting to us and making it clear to eBay that's what they're going to do, that eBay after jacking up — well, announcing that on the 18th, they're jacking the fees way up, they're giving a little bit back.

CAVUTO: So bottom line, you benefited when it looked like they were doing that, a little less so when it looked like they were retracing?

BYRNE: I don't think so. If anything, it's reinforced the point we're making, that eBay power sellers, that they're never going to have any leverage with eBay until they help a competing site get going. So they all understand that...

CAVUTO: But you're kind of lopped in with the eBays and the Amazons and all. Certainly, we were jut showing a chart of your stock chart. It's not hurting you. You were, I think, down a little bit recently on concerns that you can't get much more cost cutting going. Is that fair?

BYRNE: Well, it was strange. The margins grew from nine to 15 percent last year. And on their own, I think they'd be on their way to 16, 17, 18 percent. And I just said in maybe offhand moment in the conference call that I'd start giving some of that back to consumers and dropping our prices.

CAVUTO: And they crucified you.

BYRNE: They crucified me.

CAVUTO: What do you think of the Wall Street community? There's this large group that has a short position in your stock. They're betting that you're going to tank. And I know you've had some choice phrases for them.

But I mean, what do you make of that community that it's just betting this run-up we've seen is short lived? I know you and your dad committed to buying some of the stock, to little avail. They think that you're going to rue the day.

BYRNE: It's what makes a horserace. I'm trying to practice a new theme of praising by individual and criticizing by class. But I'm not going to...

CAVUTO: Go ahead. Come on. Come on.

BYRNE: Well, it's like sometimes it's like trying to, as you know, it's like watching teen-age girls talk about Britney Spears. They're all trying to figure out what other people think is going to be hot someday. It's so divorced from fundamentals that...

CAVUTO: I think it's the concept of your company. You know, you buy a lot of stuff from defunct companies or companies that hit the skids. You sell them on your site. The concept seemed kind of crazy, but it's worked. It's lasted. And they just say it's just a matter of time before it doesn't.

BYRNE: You know, 55 venture capitalists turned me down for money. Back in the days when kids were dropping out of Stanford Business School with a one-page business plan and getting $40 million, 55 people slammed the door in my face.

CAVUTO: Man, they must be ruing that.

BYRNE: Well, since then, you know, we liquidated 18 dot-coms funded by the same guys. I promise you I'm much too mature to take any sense of...

CAVUTO: All right. Patrick Byrne, ringing the opening bell tomorrow on the NASDAQ. That should be pretty cool.

BYRNE: It will be the end of a long journey.

CAVUTO: End of an era. All right. Thank you, Pat. Good seeing you again. Be safe, be well.

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