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Friday, August 25, 2006

A Sad Day For Home Depot Shareholders

Usually companies that announce substantial buybacks rise on the news. Usually doesn't appear to apply to Home Depot (HD). The company last night lifted their share buyback authorization by another $3.5 Billion to a total of $17.5 Billion. The company has already repurchased $12.5 Billion in stock. The dividend was also set at $0.15.

Shares are currently trading up a whopping $0.04 at $33.45 on such an overwhelming shareholder response.

So this leaves $5 Billion left under a buyback, which translates at $33.50 rounded up to a total of just under 150 million shares. With an average daily volume of 13.5 million shares, that translates to about 11 days worth of total trading volume. That isn't too paltry for a DJIA component, but we are talking about the company Jim Cramer refers to as the "Home Despot" whenever he can.

If Mr. Nardelli, the hated CEO and Chairman, cannot take a hint any better than this then he will eventually be thought of as unliked AND dumb. Obviously he isn't going to want to walk away from all the undeserved loot he gets, but he has shown very little as far as an "investor vote of confidence" to justify his employment package. Maybe he thinks he is in that $100-million plus income union that keeps you from getting fired even if you can't do the job. The company can even justify giving him a severance package if he thinks he needs the money. The street would be so happy to see him go they might just forget about the severance costs.

Jon C. Ogg
August 25, 2006

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