Monthly comment by Stuart Qualtrough


Welcome to OPI and welcome to 2008 – on behalf of the editorial team I would like to wish you all a very happy and prosperous New Year. This is the time when all the resolutions and plans for fresh starts – personal and professional – turn from thoughts and grand ideas into reality, transforming the promise into practice and realising the potential of the year ahead.

Last month’s OPI Stockwatch page appeared like a vertical column of red downward arrows as company after company saw their share values slide south. I remember thinking to myself that this appeared a pre-cursor to troubled times ahead. So when I looked with interest at this month’s page I was heartened to see a healthy smattering of green upward arrows.

But on closer examination of the figures, it’s clear there are currently a small number of gravely wounded, under-performing companies. Two stand out in particular, Office Depot in the US and UK-based office2office – both have seen their worth halved in share value terms in the space of just 12 months.

Depot is an interesting case study. The latest excuse to emanate from Delray Beach for an upcoming weaker than forecast sales report is the state of the housing market. This single excuse raised my eyebrows as it did those of many analysts.

It seems to me that the crisis affecting the US sub-prime housing market could not be wholly responsible for a dip in an entire company’s performance – is it a convenient scapegoat that is distracting from the real causes of slackening sales?

Office Depot’s stock took a double-digit dive following the announcement. At one point, the company’s stock closed at a little over $15, the lowest Depot’s value has been for years.

Analysts were quick to abandon the simple explanation. One dismissed the excuse, preferring to believe instead that Depot is simply losing market share to Staples, while another believes Staples has better execution than its competitor.

Look in contrast at Corporate Express (CE). This company endured an incredibly turbulent year throughout 2007, but at least it undertook a review and came out admitting its errors and where it was going wrong. It also publicly went on record, describing just how it was going to put things right.

On the other hand, of course, it didn’t help that most of CE’s dirty laundry was aired in public. But for the record, I personally admire new CEO Peter Ventress. Here is a man who tells it how it is – no matter how uncomfortable it is to hear; Ventress is razor-sharp, completely focused and always professional.

It is clear that Ventress never appears to shy away from confrontation. Having said that, he doesn’t provoke problems, he seeks to provide solution. Judging by his strong performance at a recent analyst meeting, it is evident that he doesn’t seek to hide behind inane excuses or execute "buy now, pay later" practices. I cannot imagine the likes of a Peter Ventress blaming the housing market for his firm’s woes.

Maybe it’s time for Depot to look back at its resolution list…

Stuart Qualtrough, Editor