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 user 2007-10-30 at 12:07:00 pm Views: 39
  • #19160

    Office Depot may have more paperclips than investors.
    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
    , 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.

    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.