Tuesday, July 08, 2008

I Want My Buyback Back...... Office Depot Edition

Another sobering example of how a dumb & greedy management has put a once solid company into deep deep trouble. You don´t need to look at the chart to see when they have decided to buy back their own shares. Why i´m not surprised that the CEO is still in power...... Can´t wait for Wall Wall Street Finest to blame management for the buyback. Too bad that this are the same "experts" praising the buyback in 2006 & 2007....... Unfortunately one of Germans blue chips is on a similar track I Want My Buyback Back.....Daimler Is Doubling Down Again

Ein ernüchterndes Beispiel mehr wie oft die Allzweckwaffe des Aktienrückkaufes von einem inkompetenten, rückratlosen und gierigen Management dazu führen kann ein einst solides Unternehmen in den Abgrund zu führen. Schön anzusehen das der CEO noch immer im Amt ist...... Kann es kaum erwarten bis die Analysten die Aktienrückkäufe in den Jahren 2006 & 2007 verteufeln. Überflüssig zu erwähnen das dies dieselben "Experten" sind die am lautesten applaudiert haben als die Rückkäufe durchgefpührt worden sind...... Dummerweise befindet sich ein deutsches Aktienschwergewicht auf dem selben fatalen Irrweg I Want My Buyback Back.....Daimler Is Doubling Down Again. Traurig!

Office Depot July 8 2008 ( Stock tanked 30 % to $ 7.12 )

As a result of additional pressure from weakening business conditions in the second quarter, North American Retail same store sales decreased nearly 10 percent versus the prior year and total Company sales were down slightly. The Company anticipates its EBIT margin to have declined for the second quarter by 200 basis points more than the 200 to 250 basis point decline previously indicated on a year-over-year basis as sales trends worsened late in the quarter.

The credit for the entire posting goes to Jeff Matthews and his superb Blog Jeff Matthews Is Not Making This Up . He saw this coming during times when Office Depot was trading close to the ATH

Der Verdienst für dieses Posting gebühert einzig und alleine Jeff Matthews und seinem Blog Jeff Matthews Is Not Making This Up Jeff Matthews Is Not Making This Up . Einer meiner Favoriten. Jeff hat das kommende Debakel wie üblich vor allen anderen thematisiert.

Jeff Matthews On Office Depot´s Buybacks during 2006 & 2007 in November 2007

.....came yesterday morning from one of the most aggressive practitioners of the “return value to shareholders” school of balance sheet destruction: Steve Odland, the CEO of Office Depot.

A sober Mr. Odland, formerly hailed as the savior of that once-proud office products retailer following a highly successful stint spent largely buying back stock and occasionally running stores at AutoZone, told Wall Street’s Finest:

"We are very disappointed in our third-quarter results and remain concerned about the economic environment over the next few quarters. We are also very unhappy with our stock price.

Unfortunately, we have cleared the balance sheet of cash, and our operating cash flows declined, so we don't have the opportunity to buy back shares at a time when we believe they are a huge value."
Specifically, Office Depot “cleared the balance sheet” of $200 million this fiscal year by buying 5.7 million shares at $35 a share.

While that doesn’t sound like much, it came after “clearing the balance sheet” of $971 million in fiscal 2006 by buying 26 million shares at an average price of $37 per share. (Last trade--you don't wanna know.)

I have to repeat myself and point to this brilliant quote from Stuart Rose via the great piece from Jeff Matthews How to Buy Back Stock: Not “Just Because We Can” .

Auch auf die Gefahr das ich mich wiederhole verweise ich auf dieses Zitat von Stuart Rose aus dem extrem lesenswerten Post von Jeff Matthews hat zu diesem How to Buy Back Stock: Not “Just Because We Can” .

"At that point in time, we still have, Doug, correct me if I'm wrong -- about 200,000 shares outstanding on the old buyback. Again, we -- like we buy our stock like we do everything else, if there's an opportunistic place to buy it. We don't just buy it arbitrarily because we can, we buy it to support what we consider basically ridiculously low levels."

AMEN!

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