*NEWS*OFFICE DEPOT NOSEDIVES
*NEWS*OFFICE DEPOT NOSEDIVES
2007-10-30 at 12:06:00 pm #19144
OFFICE DEPOT NOSEDIVES
Office Depot may have more paperclips than investors.
The company was slated to release its third-quarter earnings on Tuesday, but Office Depot announced Monday morning that it would delay the release. Without setting a new date, Office Depot cited an independent review of vendor program funds by its audit committee as having caused the delay.
Investors showed their displeasure with the postponement, causing Office Depot’s stock to plummet 14.1%, or $2.86, to $17.43 on Monday.On news of the delay, Morgan Stanley analyst Armando Lopez warned investors Office Depot’s stock “is likely to come under pressure.” Lopez added that the audit review is “another issue to hit Office Depot in recent months” as the company has suffered from weak sales in recent months, steadily falling short of competitors.Gary Balter of Credit Suisse said the setback raised concerns “to a whole new level,” and cut his price target to $17 from $24. Balter wrote: “This is not a good development for shareholders in this underperforming stock.”Matthew Fassler of Goldman Sachs believes that: “While the scope and specific drivers of the issues are unclear, the presence of any investigation with the involvement of the board suggests questions about the integrity of the company’s financial statements and, as such, render the valuation process challenging.”Other office supply firms made gains on Monday, stretching the gap between Office Depot and its competitors. Staples climbed 28 cents, or 1.2%, to $22.61 and OfficeMax Incorporated increased 4 cents, or .1%, to $32.00.
Office Depot shares slump as earnings delayed
Oct , 2007CHICAGO — Shares of Office Depot declined more than 15% in early Monday action after the retailer said it will delay releasing its third-quarter financials. said a review by its audit committee of vendor-program funds is the reason for the hold-up of the numbers, which were originally expected to be out this week. The review relates to the timing of the recognition of the funds, the company added.
Shares slumped $3.09 to $17.20 at the open, scraping as low as $16.79 — a new 52-week nadir. A year ago, shares were trading at $42 and change.”While the scope and specific drivers of the issues are unclear, the presence of any investigation, combined with the involvement of the board, suggests questions about the integrity of the company’s financial statements,” wrote Matthew Fassier of Goldman Sachs in a note to investors.”We expect high sensitivity to this issue given the significant margin expansion noted in the early portion of Steve Odland’s tenure, though it is obviously premature to assess the scope of any untoward practices, to attribute them to any individual, or to ascertain how long they have been developing,” he added.