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To: yard_man who wrote (180143)	7/16/2002 3:05:54 AM
From: maceng2	Read Replies (1) \| Respond to of 436258

Home Depot plans $2bn share buy-back Battling a dramatic slide in its share price, Home Depot, the world's largest home improvement retailer, announced on Monday that it would buy back up to $2bn worth of its shares. The company's shares dipped last Friday to $29.09, the lowest point in more than three years. Overall, the shares are down more than 40 per cent this year. The announcement was regarded as a positive step by Wall Street, and the shares rose in early trading by 42 cents to $29.51 on Monday. Moody's Investors Service confirmed its Aa3 and Prime-1 ratings for Home Depot's debt. It said its outlook for the company was stable and that Home Depot's strong credit fundamentals would leave a “significant cash cushion even after a share buyback programme of this size”. Peter Benedict, an analyst at CIBC World Markets, said the shares were significantly undervalued and Home Depot's move was a good use of the more than $5bn in cash that the company had accumulated at the end of the first quarter. Carol Tom, executive vice-president and chief financial officer, said Home Depot took the step mainly “to signal our strong confidence in the company” to shareholders. The hope is that this will encourage investors to buy. Ms Tom said that when the shares hit their low last Friday, the company considered that “they were incredibly cheap” and a share repurchase was a better financial investment than having its cash in money market funds. Bob Nardelli, chairman and chief executive, said: “Given our financial strength, we remain well positioned to invest in our current asset base and identify and capture new growth opportunities.” The $2bn share buy-back programme, effective immediately, does not rule out other strategic acquisitions. Wall Street's negative view of the company stems from lacklustre sales growth in comparable stores, that is, those that have been open at least a year. For years, Home Depot's robust growth has come largely from opening more stores, but analysts say the switch in strategy to slower store growth means the company must generate more sales from comparable stores. Peter Caruso, an analyst at Merrill Lynch, last Friday cut his near-term recommendation on Home Depot from “strong buy” to “neutral”, saying that comparable store sales were little changed. Home Depot stands behind its three-year guidance of 15-18 per cent annual sales growth and 18-20 per cent annual earnings growth. news.ft.com