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!

William Poole : "The Fed Wants To Create Inflation"

Isn´t is amazing that just a few days after leaving the Fed Bill Poole is speaking out what the real agenda of the Fed is...... The interview in the FAZ ( one of the most respected German newspapers ) covers lots of others topics like the $, China, commodities, real estate etc but the following quote stands out. The quote is even more true when you agree with my definition of inflation ( see this piece from Mish Inflation: What the heck is it? ) .

Denke hier hat die FAZ in Ihrem Interview einen echten Coup gelandet. Keinen Monat nachdem Poole aus der Fed ausgeschieden ist wird hier endlich mal Klartext über die eigentliche Agenda der Fed ( und leider auch anderen Notenbanken ) gesprochen. Empfehle zudem den restlichen Teil des Interviews zu lesen ( $, China, Rohstoffe, Immobilienmarkt usw. ). Das nachfolgende Zitat fast im Prinzip alles zusammen was man über die Arbeit der Notenbanken und ganz besonders der Fed wissen muß. Das gilt umso mehr wenn man die gleiche Definition von Inflation wie ich habe ( siehe Inflation: What the heck is it? von Mish ).

"Historically inflation is one tool to take pressure away from borrowers. The Fed´s policy is to create inflation to relieve the stress. The Fed was and will be "easy" as long as the economic situation and the health of the financial institutions have stabilized/improved "

"Historisch betrachtet ist Inflation ein Mittel, um den Stress zu erleichtern, den Schuldner fühlen. Die Politik der amerikanischen Zentralbank ist darauf angelegt, Inflation zu kreieren, um diesen Stress zu lindern. Sie war, ist und wird so lange geldpolitisch „locker“ bleiben, bis sich die wirtschaftliche und die der Finanzunternehmen verbessert hat"

> "Easy as long...." LOL! They are trying always to be easy and keep the ponzi game going. I urge you to read How The Bubble Bursts from Mr. Practical via Minyanville for a nice summary how this will end and why Bernanke & Co will fail this time.

> "So lange geldpolitisch locker bleiben wie nötig...." Das ich nicht lache..... Die geldpolitische Ausrichtung wird immer darauf ausgerichtet sein die Inflation zu erhöhen. Für eine wirklich gelungene Zusammenfassung des gängigen Zyklus empfehle ich How The Bubble Bursts von Mr. Practical via Minyanville zu lesen um zu verstehen warum Bernanke & Co diesesmal erhebliche Schwierigkeiten haben werden Ihr Schneeballsystem weiter am laufen zu halten.

On top of this i have found one of the better rants i´ve seen during the past quarter. This comes from Aaron Krowne and fits perfectly to the topic. Debate Over: It's Hyperinflation (and US Economic Collapse) .It´s also gives a different viewpoint on the inflation/deflation debate.

Habe zudem noch eine nette "Tirade" von Aaaron Krowne passend zu dem Postingthema gefunden.Debate Over: It's Hyperinflation (and US Economic Collapse). Gerade weil ich nicht mit allem übereinstimme kann ein Blick nicht schaden. Genau die richtige "Unterhaltung" für ein verregnetes Wochenende.....

GOT GOLD....? ( Within five tonnes of a new record at the GLD gold ETF )

Small Banks' Reckoning Day Is Coming

Does anyone believe Bernanke that the economy is on the way to recovery...... I cannot wait for the delinquency rates 12 month from now ( especailly in the condo segment ) . More from Mish Four Dozen Georgia Banks On Problem List , Phoenix Commercial Real Estate Financier Files Bankruptcy & the WSJ BofA, LaSalle Pact Boosts Problem-Loan Load via Calculated Risk

Diese Thematik ist in Deutschland bisher nicht sonderlich behandelt worden. In unsere Schlagzeilen schaffen es meist nur die großen Investmentbanken und die Bankentitel die sich im S&P 500 tummeln. Mindestens ebenso bedeutend ist aber für das volkswirtschaftliche Bild was sich unter dem Radar bei den regionalen Instituten abspielt. Und hier droht die "Auffanggesellschaft" FDIC ( vergleichbar mit dem Bankensicherungsfonds ) eine fast nicht zu meisternde Aufgabe. Kein Wunder das hier seit Monaten verzweifelt Restrukturierungs und Abwicklungsexperten angeheurt werden um mit den Bankenpleiten fertig zu werden. Schon fast mitleidig zu beobachten wie die Fed und Bernanke hier die Wirtschaft schon wieder auf dem aufsteigenden Ast sehen. Ich hoffe eindringlich das dies wider besseren Wissen geschieht. Bin mir nach den bisherigen permanenten Fehleinschätziungen dieser Clowns da nicht so sicher. Mehr zu diesem Thema gibt es mal wieder vom unermüdlichen Mish Four Dozen Georgia Banks On Problem List & Phoenix Commercial Real Estate Financier Files Bankruptcy sowie dem WSJ BofA, LaSalle Pact Boosts Problem-Loan Load via Calculated Risk. Man darf sich schon einmal auf den Chart in 12 Monaten freuen.....

Small Banks' Reckoning Day Is Coming WSJ

Billions in Troubled Construction Loans Promise to Pose Test for Regional Lenders

According to the Federal Deposit Insurance Corp., $45.4 billion of the $631.8 billion in construction loans outstanding at the end of the first quarter were delinquent ....

Scores of banks were already suffering headaches by the end of the first quarter, according to a review by The Wall Street Journal of FDIC-filed reports by 6,919 banks that make construction loans. The smallest banks, those with total assets of less than $5 billion, faced the biggest problems ...

Nearly one in three of the banks analyzed -- or 2,182 -- had construction-loan portfolios that exceeded 100% of their total risk-based capital, a red flag to regulators, although it doesn't mean the bank is in danger of failing. ...

Even more alarming, 73 of those banks had construction-loan delinquency rates of more than 25%. Executives at all of the banks that responded to questions acknowledged the problems but expressed confidence they had the capital to weather the storm. ....

In 2007 and the first quarter of this year, U.S. banks wrote down just 0.7% of their residential construction and land assets as bad debt, according to Zelman & Associates, a research firm. Over the next five years that figure could rise to 10% and 26%, which would amount to about $65 billion to $165 billion, Zelman projects. ....

> Enjoy the must see clip from Asia on how the landscape/skyline can look like after the bubble has burst.....

> Das nachfolgende Video zeigt eindrucksvoll wie es demnächst wohl auch in einigen Teilen der USA aussehen dürfte.....

Here is one hot candidate for a ghost tower Bangkok stlye..... Leaning Tower of Padre

Hier ein ganz heißer Kandidat für die US Version ..... Leaning Tower of Padre

Chieming Calling....

I´ll be on vacation in Chieming. I´ll be back blogging at the beginning of July.

Ich verabschiedede mich bis Anfang Juli in Richtung des wunderschönen Chieming.

I Want My Buyback Back.....Daimler Is Doubling Down Again

Wow! This adds up to a buyback of € 12 billion within 24 month..... Unfortunately my February post was spot on.... It is amazing that they still call this optimization of their capital structure. Based on todays share price their latest effort to" increase the return to shareholders" amounted in a loss of roughly € 2 billion or 30 % in just 12 month..... And all this in the face of a recession, high fuel prices hurting especially Mercedes, EADS in freefall, their truckbusiness hitting a wall, their financing unit under pressure ( margins, higher risk provision for lease vehicles , rising delinquencies etc....), their 20% Chrysler investment close to insolvency ( don´t know exactly if they are on the hook for more...UPDATE: Chrysler Taps $2 Billion Line of Credit from Daimler ), etc....... On the other hand one has to ask why the sharesholders are voting in favour for this kind of nonsense.... They deserve to pay the price. The free cashflow in Q1 was just over € 1 billion.... If this run rate continues i think that even the slow moving rating agencies will take a look at their "A" rating with a positive outlook. But with their models at work they might reward Daimler with an upgrade (as their outlook is sugesting ).....

Glückwunsch! Insgesamt summiert sich das Aktienrückkaufprogramm auf satte 12 Mrd € binnen 24 Monaten.... Damit bestätigt das was ich im Februar befürchtet habe.... Es grenzt schon an eine gewisse Arroganz den erneuten Rückkauf über 6 Mrd € immer noch als Optimierung der Kapitalstruktur zu vermarkten. Und das nachdem das letzte Rückkaufprogramm binnen 12 Monaten fast 2 Mrd € ( entspricht 30 % ) versenkt hat. Soviel Chuzpe verdient schon fast wieder Respekt...... Besonders wenn man bedenkt das die nächste Zeit besonders für Daimler alles andere als rosig aussehen wird. Eine weltweite Rezession oder zumindest ein deutlich langsameres Wachstum, hohe Spritpreise die nicht gerade die Hersteller großer Wagen bevorzugen, CO2 Diskussion, die wichtige Finanzbeteiligung EADS im freien Fall, Die 20% Beteiligung von Chrysler faktisch insolvent ( bin mir nicht sicher ob hier noch Nachforderungen drohen UPDATE: Chrysler Taps $2 Billion Line of Credit from Daimler ), das Nutzfahrzeuggeschäft bricht gerade massiv ein, die Finanzsparte als Hauptgewinntreiber kommt stark unter Druck ( Margen, Ausfälle, fallende Rückkaufswerte ), usw...... Auf der anderen Seite muß man sich schon Fragen was die Aktionäre geraucht haben um solch wahnwitzige Programme zu befürworten. Den Preis für diese Kurzsichtigkeit werden Sie wohl noch teuer bezahlen müssen...... Der free Cashflow von Daimler in Q1 betrug ca 1 Mrd €........Sollte dieses Missverhältnis noch länger anhalten dürften selbst die nicht immer cleveren Ratingageturen Ihr "A" Rating mit positiven Ausblick eher früher als später überdenken. Obwohl man bei deren Bewertungsmodellen nie genau weiß ob nicht sogar ein nicht wie Ausblick inmpliziert Daimler mit einem Upgrade belohnt wird.....

Daimler For the further optimization of Daimler’s capital structure, the Board of Management of the company decided to carry out a new share buyback program. The Supervisory Board of Daimler AG has approved this decision. In exercise of the authorization granted by the Annual Meeting of April 9, 2008, the decision of the Board of Management allows for the buyback of 10% or approximately 96.4 million of the outstanding shares for a maximum amount of EUR6 billion. In order to optimize the buyback, shares may also be acquired with the use of derivatives.

Daimler’s capital structure is to be further optimized with the goal of reducing the use of equity capital, which is more expensive than debt capital. This will avoid investment decisions being limited by excessively high capital costs. ....

The shares acquired will later be cancelled without any reduction in Daimler’s share capital. It will also be possible to use some of the shares to serve stock option plans.

The company started its first share buyback program at the end of August 2007. By March 28, 2008, 99.8 million shares had been bought back for EUR6.2 billion.

Can anyone see the impact of almost € 6 billion........`

Kann in dem Chart irgendeiner die verpulverten € 6 Mrd ausfindig machen...... ?

Share Buyback based on the Authorization of the 2007 Annual Meeting
Period	No. of Shares Acquired	Average Price (EUR)	Purchased Volume (EUR)
Total	99,768,314	62.11	6,196,752,952.16
March, 2008	27,622,866	53.62	1,481,249,244.31
February 2008	22,185,448	55.69	1,235,524,406.33
December 2007	4,384,000	69.10	302,953,032.70
November 2007	16,366,000	69.05	1,130,005,849.60
October 2007	13,445,000	74.29	998,821,360.14
September 2007	14,390,000	66.72	960,165,710.94
August 2007	1,375,000	64.02	88,033,348.15

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!

"33 Great Ways To Save Money" .... UK Yellow Press On CPI / Credit Crunch

No Kidding! The piece from the SUN ( yellow press ) in the UK is no satire ! Things must be really ugly ....... I´m not sure if this is qualifying for a contrary indicator / cover story indicator ( like this one ) regarding the inflation debate but when you read the follwoing advice in relation with mayonnaise i assume we are nearer the CPI top than most peolple think.... On the other hand i´m very very confident that the same is not true for the credit crunch in the UK !

Kein Witz! Diese Geschichte in der SUN ( britische Gegenstück zur Bildzeitung ) ist in keiner Weise satirisch oder ironisch gemeint. Scheint momentan nicht nur wegen der verpaßten EM ziemlich ungemütlich zu sein.... :-) Ich bin mir nicht sicher ob diese Berichterstattung bereits ausreicht um als Kontraindikator ( siehe dieses Beispiel herzuhalten. Bei Betrachtung des nachfolgenden Vorschlages könnte man alledrings zu dem Schluß kommen das die Konsumentenpreisinflation demnächst Ihren Höhepunkt gesehen hat...... Für den gerade erst angefangegen Credit Crunch in UK gilt das allerdings auf keinen Fall. Hier hat der Spaß sicher gerade erst begonnen......

21. Mayonnaise is a fine hair conditioner, adding shine.

Give hairdressers the brush off if you want blonde highlights — just brush lemon juice into your barnet and let it dry in the sun.

I think it´s difficult for the BOE & other central banks to claim that are still in control over "inflation expectations" ( see Real Cost of Living Index (RCLI) is rising at 9.5 per cent. via Barry Ritholtz ) ........Disclosure : I´m with Mish´s definition on Inflation ( see Inflation: What the heck is it? )

Der ständige Hinweis das die Notenbänker immer noch Kontrolle über die Inflationserwartungen haben klingt allerding von Tat zu tag lächerlicher ( siehe auch Real Cost of Living Index (RCLI) is rising at 9.5 per cent. via Barry Ritholtz ) ..... Hinweis : Bekanntermaßen sehe ich die Definition von Inflation wie Mish ( siehe Inflation: What the heck is it? )

The SUN THE credit crunch is biting but you can ease the squeeze if you take a few simple steps.

Here Sun cheapskate TIM SPANTON shares his expertise, with 33 great ways to save money now that prices are rising at 3.3 per cent, the highest rate for more than ten years.

But be warned – there are some tips here even miserly Ebenezer Scrooge might be ashamed of taking up.

Remember, if you’re feeling the pinch, laughter is the best medicine – and it’s FREE.

1. Use banana skins to clean your shoes. The inside of the skins contains potassium, a key ingredient in commercial polishes.

Finish off with a soft cloth. Oils in the banana will even enrich the leather in your shoes and help them last longer.

2. Collect old slivers of soap and squeeze them together to make a new bar.

3. Never buy the first round in a pub. If you go drinking once a week and always get to the bar first you will end up buying dozens more rounds more a year than a person who always buys the fourth round.

This is because drinking sessions often end after an odd number of rounds. .....

8. Buy postage stamps in bulk, before the prices go up, which we all know they will. .....

14. Mix milk with equal amounts of water to go on your breakfast cereal. You will soon get used to it. The slight difference in taste is very small and soon won’t be detected at all.

15. Watch telly in bed in the dark. You’ll save on heating and lighting costs and if there’s a sexy show on, you might even get a bonus cuddle from your partner.

18. Get off a stop early if you commute by bus or Tube to save cash. ....

24. Buy Christmas presents in the sales after the holidays and keep for a year.

27. Shower instead of bathing. To save even more, shower with a friend.

>If you don´t believe me that this is not an ironic piece from the SUNn click the link and read the entire link... There are lots of suggestions that do make sense and are less "exotic".

> Wer mir nicht glaubt das dieser "Ratgeber" ernst gemeint ist sollte zur Kontrolle den kompletten Link lesen .... Dort finden sich in der Tat etliche Hinweise die hilfreich und weniger "skuril" sind.

One City Suffers In Silence.....

As i´ve said over and over again..."The Daily Show Rocks!"

Denke das wir hier ebenfalls eine solch geartete Sendung vertragen könnten. Die Politiker liefern momentan mehr als genug Monition um ein stundenlanges Programm zu füllen......

Larry Wilmore travels to Beverly Hills to show how the city of glamour and excess has been hard-hit by the recession.