Overstock.com files for initial public offering

The dot-com IPO market must be reviving. PayPal went public three weeks ago and saw a jump in price from $13 to $21 and is now selling at about $18. And this week, Overtock.com filed for an IPO. Overstock says it will use proceeds from the $36.8 million it hopes to raise for expansion and debt reduction. San Francisco-based financial services firm WR Hambrecht will underwrite the IPO.

Salt Lake City-based Overstock built its early business model on scooping up the merchandise of distressed or defunct internet retailers and offering it at deeply discounted prices on its own web site. With that source of supply drying up as the number of failing dot-coms has bottomed out, however, Overstock.com has focused on liquidating closeout merchandise from manufacturers and growing its b2b business. In SEC filings for the IPO, the company said its objective is “to leverage the Internet to become the dominant closeout solution for holders of brand-name merchandise, allowing them to dispose of that excess merchandise discretely and with high recovery value."”

According to CEO Patrick Bryne, inefficiencies in the current market for closeout merchandise represent an opportunity for profit for Overstock.com, and a chance for higher returns on capital for the retail industry. To pursue those opportunities, Overstock will seek to develop continuing relationships with manufacturers, streamline inventory management and boost marketing initiatives through the use of technology and the Internet, as well as continue growing its b2b business.

Ovetrstock.com currently offers about 4,000 products in 13 categories on its consumer and b2b web sites. The company generated some $40 million in revenues last year, a gain of 57% over the previous year, while shrinking its net loss to $13 million. Overstock posted profits of between $300,000 and $400,000 in December, according to Byrne.

Overstock`s IPO filing says the company has not determined the number of shares it will sell or at what price.