Tuesday, June 19, 2007

Home Depot Buyback: Great, But, When?

So the Home Depot (HD) made a splash this afternoon with the announced $22.5 billion buyback. But they failed to answer one little question... when?

The board of directors authorized a $22.5 billion increase in its share repurchase program and stated their intent to repurchase up to $22.5 billion in shares as soon as practicable. It will be funded with the proceeds from the sale of HD Supply, existing cash on hand and proceeds from an anticipated $12 billion issuance of senior unsecured notes. The $22.5 billion share repurchase may be in the form of a tender offer, open market repurchases or accelerated share repurchases, the details of which will be announced at a later date.

"Our planned recapitalization is transformational for our company. While we continue to invest heavily in the five priorities focused on our core retail business, this recapitalization plan allows us to return significant capital to our shareholders, improve the efficiency of our balance sheet by lowering our cost of capital, while at the same time retaining strong financial and operational flexibility," said Carol Tome, CFO and executive vice president - Corporate Services.

"As soon as practicable?" When is that? 3 years? 13? Stuff like this drives me crazy, if you are going to announce something that big so you make headlines, give us some sort of time frame. The time frame of the buybacks is the only thing that really matters when it comes to their impact. Over the next decade I would expect them to come close to that amount, if they are going to do it in the next 3, that is something entirely different.

Details boys... details....

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