Read the ten best online stores this holiday
Read the ten worst online stores this holiday 

To put those customer service rankings in context, we looked at how the parent companies that own the websites have performed recently.  We found that a strong customer service rating often coincides with a company that has widely regarded brands.

It begs the question: Does Apple (NASDAQ: AAPL) have such a high customer service ranking because so many consumers love the Apple brands? Or, is Apple’s customer service for online shoppers really superior to that of other e-commerce businesses? Apple is tied for second place in the index. Amazon.com is in first place. It also has a sterling reputation with consumers, as do some of its major products like the Kindle.

At the bottom of the ForeSee index are Gap (NYSE: GPS), Sony (NYSE: SNE) and Overstock (NASDAQ: OSTK). Gap recently said it would close 21% of its U.S. flagship stores. Sony has had trouble gaining sales for its PCs, games, smartphone and TV products. Overstock, an also-ran online department store, was founded in the days of the dial-up internet. It is hard to see how any of these could be at the top of the list. Or, perhaps if they were at the top of the list, they would not be in such deep trouble now.

ForeSee’s E-retail Satisfaction Index included the top 40 retailers by sales. The company surveyed 8,500 customers between Thanksgiving and Christmas. Despite its shortcomings, 24/7 Wall St. used the data from ForeSee as a foundation, because it is a reasonable measurement of the experience that consumers have with specific e-commerce sites, whether those sites are part of highly successful companies or ones on the verge of failure.

There is also some evidence that a few troubled retailers have actually performed well online. Whether that success is enough to save the companies themselves is impossible to tell. One such example is Avon (NYSE: AVP), with online service that is tied for second among all e-commerce sites in the ForeSee index. But Avon recently posted a disastrous quarter, and its CEO of 12 years was dismissed. Similarly, JCPenney’s (NYSE: JCP) online operations’ customer satisfaction is equal to Apple’s, which is also tied for second place in the ForeSee rankings. However, JCPenney has lost sales to big-box retailers such as Walmart (NYSE: WMT) for years. It is worth noting that JCPenney just hired the head of retail stores at Apple to turn the bricks-and-mortar retailer around. Apple is one of the few companies that was successful online long before it began to build physical stores.

These are the the companies with the best and worst online customer satisfaction. To draw our conclusions about why they are on the list and what the relationship is between the companies and their e-commerce operations, we examined three factors: the ForeSee satisfaction data, the annual sales of each of the companies, and the amount of traffic each site had in November — the most recent month measured by audience research firm Compete.com. Foresee describes its rating as “Average customer satisfaction with the top 40 U.S. e-retail websites increased by one point this year to tie 2009’s all time high score of 79 on the study’s 100-point scale. Satisfaction scores for individual e retailers span a 16-point  range, from a high of 88 (Amazon) to a low of 72 (Overstock).”

Apple is not alone. Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG) have both already experienced this brain drain effect. The risks are not just top executives leaving. The risk is that other employees will follow executive defections in the months and years ahead. More importantly, even the underlings who do not follow former executives to the same destination are either more likely to accept calls from recruiters or are more likely to go pursue new challenges and opportunities. If those employees feel that the best days of growth have been seen or if they feel they have already been made millionaires on stock and options, then the incentive to stay may even be less.

Again, this has happened elsewhere. It is not a definite outcome at Apple, but if it does occur there it will not be the last such case in business history. Now the new destinations for talent are numerous, from gadget-makers, to social media, to internet and software, and to many aspects of hardware. Imagine how many executives at Facebook, Groupon, Zynga, Dell (NASDAQ: DELL), HP (NYSE: HPQ), Oracle (NASDAQ: ORCL), EMC (NYSE: EMC) and elsewhere would love to bring in some of the Apple culture. These companies could certainly lure employees with salaries and stock options.

Microsoft has seen a large amount of brain drain over the past decade, and much was credited to the departure of Bill Gates, when employees could seek new challenges and after they had accumulated wealth. The departures were in the Windows design team, Windows Live, MSN, Xbox and Zune, and on. One of the most noted departures we tracked was Ray Ozzie as chief software architect, which Microsoft-Watch said was on the heels of other key departures. Business Insider gave a list in early 2011 of the top ten departures over the last ten years. What is funny about Microsoft is that the departures are often not usually over pay, but over pressure, lifestyle, and a desire to seek new challenges elsewhere.

Google has suffered a brain drain in recent years as well. The once best place in the world has peaked as far as its ability to grow, compared to the past. Google originally had been able to attract people seeking new challenges, but Google is not really known for being the top salary destination, and its workforce has expanded massively. Back in 2008, Wired wrote about the brain drain that occurs after a four-year or five-year option vesting plan. In late 2010, the company even reportedly instituted pay raises of about 10% to be more competitive. And now we have Larry Page as CEO without the full-time adult supervision of Eric Schmidt.

So, the focus on Apple …

GM (NYSE: GM) is likely to post its first annual profit since 2004. (Reuters)

An effort by shareholders to get Apple (NASDAQ: AAPL) to reveal a succession plan for Steve Jobs was voted down. (Reuters)

AIG (NYSE: AIG) may post a large loss but results from important divisions will be watched by Wall St.  (Reuters)

The Administration will push for $20 billion in loan modifications as part of a settlement to settle foreclosure problems. (WSJ)

The US is about to make a decision on an Air Force tanker which will change the fortunes of either Boeing (NYSE: BA) or Airbus. (Reuters)

Most global markets fell on concerns about Libya. (Reuters)

An upcoming event staged by Apple will probably be used to launch the iPad 2. (Reuters)

Samsung released an ultra thin notebook in an attempt to get market share from Apple. (Reuters)

Google’s (NASDAQ: GOOG) YouTube will try to use Bollywood films and cricket to get a larger piece of the market in India. (Reuters)

Rio Tinto (NYSEL RTP) extended its $3.2 billion offer for Riverdale. (Reuters)

Obama will press banks to settle on mortgage foreclosure issues by reducing principles on large numbers of home loans. (WSJ)

A large number of Irish are leaving the country due to austerity measures. (WSJ)

Sears (NASDAQ: SHLD) named technology executive Lou D’Ambrosio as CEO. (WSJ)

The net income at BASF doubled. (WSJ)

Overstock (NASDAQ: OSTK) received penalties from Google (NASDAQ: GOOG) for misusing its AdWords system. (WSJ)

A bond sale from Illinois succeeded but at high interest rates. (WSJ)

Toyota Motor (NYSE: TM) has quietly set up quality support plans. (WSJ)

Wall St. bonuses dropped in 2010. (WSJ)

Oil prices could damage the worldwide recovery. (WSJ)

GE (NYSE: GE) and Siemens will launch electric car charging products. (WSJ)

Google has created software that will allow users to transfer data from Microsoft (NASDAQ: MSFT) desktop software to Apps. (WSJ)

State unionized workers have joined hands and set aside regional differences. (WSJ)

Republicans may set a deal to keep the government open for two weeks and cut $4 billion in spending if a budget agreement is not reached. (WSJ)

Calls for demonstrations in China continue to be made online. (WSJ)

The business of selling used handsets in booming. (WSJ)

A patent infringement case against Abbott (NYSE: ABT) was reversed. (WSJ)

Consumer products companies are having challenges as they try to pass along higher cost of goods prices to customers. (WSJ)

Moody’s reported that investors in distressed debt have done better in this recession than in prior ones. (WSJ)

About 12% of US banks are at risk of failure according to a study from the FDIC. (WSJ)

China may have to import more wheat. (WSJ)

Airlines are trying to raise fares as oil rises. (NYT)

Brent crude rose above $119. (FT)

Credit Suisse is looking at its US unit as part of a tax fraud investigation. (FT)

US farm prices have risen with the surge in the value of commodities. (FT)

The merger between Porsche and VW has slowed as shareholder issues are being scrutinized. (Bloomberg)

Douglas A. McIntyre

Twitter has, by most estimates, 75 million visitors a month, which makes it one of the largest social networks in the world. All major media companies are on Twitter and some have more than one million Twitter users.

24/7 Wall St. will look at the Twitter posts at Reuters Biz, WSJ, Financial Times, CNN Money, MarketWatch, CNBC, and 24/7 Wall St. each day to see which stocks are most frequently mentioned. It is clear that in this area of social media these tweet are a sign of which companies the Twitter universe is interested in. These financial sites are followed by a combined 625,000 Twitter users which makes them a sizeable sample of Wall St.’s interests. In some cases, we will publish the actual tweets from the sites.

Among the daily top trending  symbols on stock twitter aggregator StockTwits are RIM (RIMM), Mosiac (MOS), Ford (F), PMI (PMI), Overstock (OSTK), Potash (POT), ARCA biopharma (ABIO), and Goldman Sachs (GS).

StockTwits: $RIMM Canaccord maintains bullish stance

CNBC: ABC, CBS and Fox affiliates are asking Comcast for a meeting and concessions – I got the details: http://bit.ly/9WY9LN $CMCSA $DIS $CBS $NWS

Reuters Biz: Bombardier profit misses Street view http://link.reuters.com/syn26j

CNN Money: ‘We aren’t in Google any more’ http://bit.ly/bpvTd3

FT: Dimon attacks ‘demonisation’ of big banks: Jamie Dimon attacked the ‘demonisation’ of large banks by politicians, … http://bit.ly/d9UWT5

Douglas A. McIntyre

The e-commerce satisfaction index ForeSee created has a maximum score of 100.

The results are especially troubling for Neiman Marcus which has posted 18 months of declining retail sales. It had a score in the ForeSee research of 73. Sears, which has struggled with a turnaround since buying K-Mart, had a relatively low score of 75.

Gas (NYSE:GPS), Overstock (NASDAQ:OSTK), Target (NYSE:TGT), Best Buy (NYSE:BBY), and SonyStyle (NYSE:SNE) posted numbers below the survey’s median number.

It would not surprise anyone that Amazon (NASDAQ:AMZN) finished first in the poll with at satisfaction rating of 87, or that Apple (NASDAQ:AAPL) and NetFlix (NASDAQ:NFLX) did well. The firm’s with the best reputations for taking care of customers seem to be keeping those reputations. The weak retailers, in the meantime, are not doing themselves any favors by fumbling their online operations.

Douglas A. McIntyre

Reuters:   An SEC attorney raised concern about a Madoff report in 2004.

Reuters:   Auto parts supplier Lear filed for bankruptcy.

Reuters:   NYC apartment sales are down more than 50%.

Reuters:   Beijing Automotive will bid for Opel.

Reuters:   GM told a judge asset sales was its only option.

Reuters:   The Treasury will name 9 managers for its toxic asset plan.

Reuters:   Investors are turning to stock picking after the big rally.

Reuters:   Domestic cars sales were down again and Ford (F) picked up share.

Reuters:   The rights offering for Rio Tinto (RTP) had a strong demand and Chinalco kept its percentage steady.

Reuters:   Madoff customers have gotten $231 million so far.

WSJ:   The appointment of the president of the NY Fed shows how little power regional directors have.

WSJ:   Big pay packages are back on Wall St. and Goldman Sachs (GS) workers may get an average of $700k this year.

WSJ:   Boeing (BA) is tightening its grip on 787 production.

WSJ:   Housing and ISM data lifted stocks.

WSJ:   Beazer (BZH) will pay up to $53 million in fines to settle mortgage fraud charges.

WSJ:   GM will aim at an IPO next year.

WSJ:   GM sales show the importance of China.

WSJ:   A law cutting mobile phone fees in the EU took effect.

WSJ:   Sirius (SIRI) raised the compensation of CEO Mel Karmazin.

WSJ:   Inflation is unlikely because unemployment is so high.

WSJ:   BP (BP) bid to build oil field in Iraq faces challenges.

WSJ:   The price of the AIG (AIG) investment unit appears to be falling.

WSJ:   NYSE (NYX) has cut trading times to five milliseconds.

WSJ:   S&P’s (MHP) bond rating chief left.

WSJ:   China’s massive loan expansion may become a problem.

WSJ:   Roche cut the Tamiflu price for developing countries.

WSJ:   Dow Chemical (DOW) will cut three plants.

WSJ:   Overstock (OSTK) dropped affiliates in four states to protest taxes.

WSJ:   The new president of News Corp (NWS) could earn $43 million in his first year.

NY Times:   GM must complete the sales of its assets by July 10 or it could lose government financing.

NY Times:   A cut in risk at Morgan Stanley (MS) may lead to a loss.

NY Times:   Banks are increasing fees to offset losses.

NY Times:   Anti-smoking drugs Chantix, made by Pfizer (PFE), and Zyban, made by GlaxoSmithKline (GSK), can could lead to suicide and mental illness in some cases.

NY Times:   Facebook will offer new features to help users maintain privacy.

FT:   Data are showing signs of a global recovery.

FT:   SEC is urging rewarding whistle blowers.

FT:   K-Mart (SHLD) will offer discounts to the unemployed.

FT:   WPP’s CEO sees no signs of an economic recovery.

Bloomberg:   The stimulus package is probably not improving hiring.

Douglas A. McIntyre

The company ended the quarter with $78.607 million in cash on hand and managed to trim its net inventory from $17.723 million at December 31 down to $11.695 million at the end of March.

Shares have reacted positively to earnings so far with a gain today of 11% at $12.59; its 52-week trading range is $6.34 to $29.59.  Many consider Overstock a hybrid company that falls somewhere in between Amazon.com and eBay.  They key difference is that the company is still losing money each quarter, and the others are not.

JON C. OGG

A fair accusation perhaps: but where are the buyouts? In the decade or so since naked short selling became the red herring for underperformance, we’ve seen dozens of companies complain loudly about market manipulation: from penny stock pump and dump Universal Express to subprime blowup Novastar Financial, to the perpetual money losing but still solvent Overstock.com OSTK).

Here’s what I don’t understand: if markets are reasonably efficient when they aren’t being manipulated, which most people would agree is true, then surely widespread naked short selling would drive stocks down below their intrinsic values. If it didn’t, what would be the problem? And if it does, then why aren’t we seeing purported naked short selling targets popping up as buyout targets.

Even highly-respected investors like Marty Whitman have accused short sellers of conducting a "bear raid" on companies like MBIA (MBI) and Ambac (ABK): MBIA has gone from $68 to $5 per share in the past year, with nary a rumor of a private equity, sovereign wealth, or strategic buyer being interested. Given that, it seems likely that the stock was wildly overvalued at $68, and investors have the short-sellers to thank for bringing them back into line.

The ability of companies to make bids for public companies should place a floor on the ability of market manipulators to drive down stocks: beat it up enough and it’ll get bought out at a premium. The fact that that almost never happens indicates that the whole naked short selling scandal is a farce. But we already knew that.

Zac Bissonnette

The company site can be accessed at http://realestate.overstock.com.  Overstock believes the site is unique as it helps shoppers identify great deals from more than three million classified, foreclosure, and hard-to-find auction homes for sale.  The site is supposed to automatically highlight auction, distressed, and foreclosed properties.

If you are seeing tools like this launched, you have to wonder if perhaps the foreclosures, auction, and other troubles are very close to reaching their own bubbles.

Jon C. Ogg
June 10, 2008

Chairman & CEO Patrick Byrne: "Jason co-founded the company and helped build it before retiring the first time.  When I screwed it up a couple years ago, he came out of retirement and has played a decisive role getting it back on track… He’s done a superb job. Now that it is back in a solid trailing twelve month cash-flow-positive position, he wishes to return to our previous arrangement…. he will still oversee special projects in a part-time capacity."

The good news is that Patrick Byrne recognizes the mistakes of the past.  The bad news is that Jason Lindsey was thought of as "the adult supervision" by many on Wall Street.  A value manager at the recent VALUE INVESTING CONGRESS noted how much he had accomplished there when offering her viewpoint on Overstock.com.  Patrick Byrne had also recently noted how margins had been down on discounts.

OSTK closed down almost 3% at $15.10 today in a very weak market, and the 52-week trading range is $14.05 to $39.39.  There have been very few prints after the close.  The print we saw in after-hours was higher, although this is indicated lower after the news.

Jon C. Ogg
January 2, 2008