Home Depot Commercial

Added: Aug 20, 2008

From: pennysaver4you

Duration: 2:6

http://www.shopaisle19.comget your free mall.....The really important question about the sale of Home Depot's construction supply business isn't the price, which Home Depot lowered 18% on Aug. 28, to $8.5 billion, after round-the-clock negotiations. The real issue is whether the unit should be sold at all. Some upset investors argue that by selling HD Supply, which serves contractors rather than do-it-yourselfers, Home Depot's new management is dumping its best hope for future growth simply to finance a stock buyback and exorcise the ghost of ex-Chief Executive Robert Nardelli, who masterminded the purchase. They say Home Depot (HD) is giving away a prize to a bunch of smart buyout firms that will extract huge profits from it over the long term.Even at the original higher price of $10.3 billion, the HD Supply sale struck some big Home Depot shareholders as misguided. "There was a lot of politics involved," says Marvin Roffman, founder of investment company Roffman Miller Associates, which owns 172,000 shares of Home Depot. He says the sale will sacrifice future growth to appease hedge funds such as Relational Investors. Relational, run by Ralph Whitworth, has two seats on the Home Depot board and helped drive the sale of the HD Supply business.Atlanta-headquartered HD Supply, which accounts for $13 billion of Home Depot's $93 billion in revenue, was acquired under Nardelli's leadership. Nardelli's successor, Frank Blake, moved swiftly to sell it after the hard-driving Nardelli was ousted in January because he refused to accept a cut in his huge pay package. (Nardelli has since been hired by Cerberus Capital Management to run Chrysler.) New management appeared to go to great lengths to erase any sign of Nardelli's tenure. Roffman says that's a shame. "I really thought Nardelli's idea was pretty good. The do-it-yourself market is a mature business, and I thought the contractor supply business, fragmented among thousands of small independent dealers, was where the do-it-yourself market was 20 years ago," Roffman says.Proponents of the sale say the contractor supply business is even more volatile than the consumer market, has lower margins, and is a distraction to management. "The sale is a good idea because it gives Home Depot management a chance to focus on what it does best: growing the franchise in the U.S. and in select markets elsewhere such as Mexico, Canada, and China. That is enough for one management to do," says Craig Johnson, president of consultancy Customer Growth Partners, in New Canaan, Conn.://www.businessweek.com/bwdaily/dnflash/content/aug2007/db20070828_932941.htm?campaign_id=tbw%22

Channel: Education

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