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AnonymousInactiveOFFICE 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. -
AuthorOctober 30, 2007 at 12:07 PM
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