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Office Depot, Inc. Message Board

  • marginspender marginspender Aug 6, 1999 11:10 AM Flag

    This is amazing!

    Who is selling at these prices? ODP is such a bargain. I have to believe it will come back soon.

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    • The stock price is now 37.3% below where it was
      at the start of the year and 25% below where I
      bought it just a month ago. Is there any reason for this
      stock to be punished this way? All I know of is false
      rumors and one man's opinion at DLJ. Do they really
      carry that much weight?

      OMX and SPLS have slowly
      started moving up, but ODP continues to slip.

      anyone has any reasons that can be discussed here,
      please bring them forth.

    • I was very interested in your analysis of ODP's
      opening more stores or stock buy back. I bought this
      stock at 21 but its fundamentals and stock action made
      me decide very quickly that there must be something
      I missed, and I sold about 20. A small loss
      considering where the stock is today. I would like your in
      put as to what you consider the future aspects, and
      profits going forward will be for this company and in
      what kind of time frame work.I can't find anything
      wrong with this company, except wallstreet
      recognition.I defer to your judgement. Thank you.


    • Office Depot (ODP) 13 3/4. Beaten up so badly
      it's worth a look. After warning following the market
      close yesterday, Office Depot traded down to about 10
      1/2 in after hours trading. Then this morning,
      PaineWebber downgraded the stock from "buy" to "attractive".
      This was a $25 stock just five months ago, but since
      then it has been straight down. Frankly, this is
      surprising (in hindsight), because ODP posted had steady,
      decent results for years, and seemed to be reasonably
      well managed. The stock had not been a superstar, but
      had put in a consistent performance over the past few
      years. In fact, the numbers ODP are now talking about
      aren't all that terrible. ODP says that second half
      earnings will be in the $0.38 to $0.40 per share range
      rather than the $0.50 to $0.52 per share range Wall
      Street had been expecting. We've seen a lot worse
      warnings. And, even if earnings come at $0.38 per share,
      that would still leave 1999 earnings at $0.82 per
      share. Not too bad for a 10 1/2 dollar stock, because
      that puts its good old fashioned price/earnings
      multiple at a reasonable 12.8. Multiples like that are
      hard to find these days. ODP earned a split-adjusted
      operating profit of $0.79 per share last year, so that
      still represents a bit of growth for the full year,
      although results for the second half of the year would be
      about flat. Given all this, is going to
      stick our neck out a bit for a beaten up stock. ODP is
      not going to turn into a hot stock soon, but there is
      some value here. Concerns include the effect of the
      Internet on their bricks and mortar business and the fact
      that there have been too many write-offs lately.
      However, the worst may now be in this stock and it is
      worthy of consideration for patient investors. - DG

    • VKNG is still the major mail order force in
      Europe (associates in the UK tell me that SPLS's Quill
      launch over there was pretty uninspiring in terms of
      customer service) and ODP is still strong internationally.
      Whilst it would have perhaps been encouraging to see ODP
      take a position in Germany and leverage VKNG's
      dominance there, SPLS and ODP still do not compete at a
      retail level in any of these 3 markets (Germany, Holland
      and Portugal).

      It's a big (bad) world and if
      ODP continues to steer clear of SPLS (on a pure
      retail level) internationally, the short term effect to
      ODP is negligible. The way I see it at the moment,
      SPLS has established a great base in Europe... but
      their UK experiences have been costly and Germany has
      been challenging. It's worth remembering that over
      there the retail landscape is very different to the
      USA, and even more different to Germany. I would be
      interested to see what the analysts (DLJ excepted) make of
      the news given that office superstores + Europe
      haven't yet equalled profit. And also given that these
      stores have been sold once already in the last year (by
      Metro to a Deutsche Bank led group of investors). Hot
      potato or good business by the Germans?

      Long term
      however, one must question how long ODP can ignore
      Europe's 2 largest office supplies markets (Germany and
      UK) from a retail perspective. If I were Mr Fuente, I
      would be going all out to acquire a similar
      competition-free established international presence. The Coles
      Myer owned Officeworks chain in Australia springs to
      mind. Market dominant, well-established, similar
      culture and language, and another VKNG

      But what do I know - almost every stock I own has
      tanked recently!

      Good luck to all - could be a
      long ride.

    • I work for the business services division of ODP
      and I won't get into the why's or how's this stock
      will hit 40 within 12 months but if you look at the
      past I believe you will be able to figure it out
      yourself. Viking had a Gross Profit of 45%, they used
      almost half the staff for the same amount of work done
      at ODP facilities, they use state of the art
      equipment and there management team is all but taking over
      all distribution center's everywhere. To get ODP at
      14 or 15 is one of those purchases you can't pass up
      but will kick yourself when you check in 3 or 4
      month's. The last down grades were on a short term basis
      only, so gobble up as much as you can......and you
      won't regret it.

    • classify as a white candle? You mentioned this phenomenon a few weeks back. Thanks.

    • Last Stockholders meeting revealed $900,000,000
      cash on hand.
      At that time I thought "Great,we
      won't have to increase debt
      while opening additional
      stores even with the credit raising
      ranking by the
      I do like that buy back idea.

    • Maybe.... ODP should buy SPLS?
      Nahhh, those
      Yankees would have a hard time taking direction from a
      bunch of Southerners anyway.

      Tip: If you want to
      make some money this year dump ODP and buy MER.

    • General direction of the market is down. It would not stop till 8/24.


    • Small towns in rural and suburban areas are ripe
      markets for these retailers' expansion plans. Megastores
      can underprice small office-supply stores, and the
      growth of home offices in rural areas is booming. Some
      28% of Staples' stores will be in small towns by the
      end of 1998, up from 10% four years ago, while
      OfficeMax dropped the minimum population size for its
      markets to 50,000 from 200,000.

      Vroom also cited
      great expansion potential in Europe because of its vast
      and expanding number of small businesses. A research
      report at Lehman Brothers noted that the Viking deal
      significantly lowers the risk Office Depot faced in
      international expansion because of the acquired firm's
      exceptional infrastructure, management know-how and vendor
      relationships overseas.

      The shift to the
      All of the companies are also expressing hopes that
      the Web will play a big part in expansion.

      course, none of these companies have yet won
      Internet-style earnings multiples. Quite the contrary. In the
      past month, they've all been shredded. A recent
      Information Week article reported electronic procurement
      continues to win converts; Los Angeles County plans to move
      80% of its $627 million in annual purchasing to the
      Web directly from suppliers by the middle of 1999,
      replacing the county's current paper-based acquisition
      system. OfficeMax is aggressively offering more than
      20,000 items from its Web site, and Office Depot has
      followed suit. According to Daniel Binder, an analyst with
      Brown Brothers Harriman, 4,000 new customer accounts
      came on board since January -- and by year's end, the
      company expects to be conducting 20% of its business
      through the Internet.

      Of course, none of these
      companies have yet won Internet-style earnings multiples.
      Quite the contrary. In the past month, they've all been
      shredded. Office Depot is down 30% and Staples is down more
      than 20%. But of the bunch, Office Depot appears the
      cheapest -- trading at a 40% discount to Staples, with a
      price-earnings ratio of 20.9 compared to Staples' 50.7. The
      company suffers from a negative perception as the target
      in last year's failed merger. But according to
      Lehman Brothers, the stigma is "rapidly fading." At the
      other end of the spectrum, OfficeMax's present
      price-to-earnings ratio is low at 14.53.

      Any investors who
      believe that the current economic expansion will continue
      should probably consider taking a highlighter to this
      sector. These stores could still get cheaper, but it
      might be time to start stocking up on supplies.

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