This morning's news that General Motors Corp. (NYSE: GM) has 60 days to come up with a new restructuring plan -- coupled with the decision to oust its CEO Rick Wagoner -- suggests a new 'get tough' attitude towards companies that take taxpayer money. While I am not sure that Wagoner deputy Fritz Henderson, who took over as CEO, is the right person to restructure GM, he is at least different.

But the bigger question for the U.S. is whether President Obama's intellectual toughness will extend to the financial industry. Why does the U.S. keep shoveling hundreds of billions of dollars of taxpayer money into zombie banks without requiring them to produce the same kind of viability plan that the administration demands of the auto industry? Throughout the last several months I have continued to find it strange that banks keep getting more and more money with no questions asked while the auto industry has to work much harder to get much less money.

Continue reading Obama should extend auto industry tough love to banks

Obama should extend auto industry tough love to banks originally appeared on BloggingStocks on Mon, 30 Mar 2009 08:20:00 EST. Please see our terms for use of feeds.

General Motors Corp. (NYSE: GM) and Ford (NYSE: F) are going in front of Congress today to ask for $25 billion worth of taxpayer money. (It seems they won't be flying in separate private jets.) GM will announce a reopening of its UAW contract and the winding down of its Hummer, Pontiac, Saab and Saturn brands. Ford will try to sell Volvo to the Swedish government. What's lacking from both plans at this stage is enough detail about cost savings to know whether taxpayers will get their money back.

As I posted, there is a $16 billion (in cost savings) six point restructuring plan which GM could have used, but it chose a different path. The six-point plan involved closing or selling the four brands and their related dealerships. GM's plan proposes to slowly wind down these brands and keep the dealers. It has been trying to sell Saab but no takers have emerged.

Moreover, GM workers remain higher paid than workers of its Japanese competitors. For example, UAW workers make an average of $76 an hour, including the cost of retiree benefits. Toyota Motor Co. (NYSE: TM) workers cost, all in, about $18 an hour less. It is unclear how much GM plans to cut from UAW pay by reopening the contract. Absent more details, today's GM restructuring plan does not provide a clear path to profitability.

Continue reading GM and Ford ready weak pitches for taxpayer bucks

GM and Ford ready weak pitches for taxpayer bucks originally appeared on BloggingStocks on Tue, 02 Dec 2008 09:40:00 EST. Please see our terms for use of feeds.

Dateline, January 3, 2007: Bob Nardelli steps down as CEO at Home Depot (NYSE: HD). In leaving, Nardelli, who had been at the head of Home Depot for six years, scooped up a severance package valued at about $210 million, kindly tipped his hat, and slid his resume across the desks of Chrysler. Does this make the man an opportunistic corporate blood sucker, an overcompensated leadership figurehead, or just plain shrewd? My answer to that question would be, none of the above.

When trying to judge the departure of Robert Nardelli relative to his compensation and performance, two things need to be considered right on the front end. First, our jealousy factor must be removed from the equation. Second, we need to remember that compensation packages at this level are negotiated on the front end. Bob Nardelli didn't "get away" with anything. He executed the terms of an employment contract, plain and simple. How many of the ambitious persons reading this blog wouldn't have done exactly the same when given the same circumstances?

Most of the negative sentiment surrounding Nardelli's well-heeled departure emanated from shareholders who were hurt by a slow yet significant decline in HD's share value. But the fact is that within the past four years of Nardelli's tenure, HD's shares provided more consistent performance than the four years prior. Granted, investor's haven't seen Home Depot shares approach the past high of nearly $70, but in light of today's economy they probably won't see anything like that in the near future, and that's certainly not Nardelli's fault.

Continue reading Money Winners of 2007: Bob Nardelli takes the cake and eats it too

Money Winners of 2007: Bob Nardelli takes the cake and eats it too originally appeared on BloggingStocks on Fri, 14 Dec 2007 15:36:00 EST. Please see our terms for use of feeds.

Home Depot (NYSE: HD) cut its annual forecasts for revenue [subscription required], same-store sales, and earnings. The company said that it now expects 2007 fiscal year earnings to fall 15%. Same-store sales should fall in the single digits and revenue will be off as much as 2%.

The company also said it would launch a tender offer for 250 million shares.

The huge home improvement retailer has now gone a long way to prove that Bob Nardelli, its former CEO who was so unpopular with investors, had very little, if anything, to do with the company's poor fortunes.

Nardelli may have been arrogant and too well-paid, but it was high oil prices and a damaged housing market that killed HD's stock.

Douglas A. Mcintyre is a partner at 24/7 Wall St.

Home Depot cuts forecasts originally appeared on BloggingStocks on Tue, 10 Jul 2007 07:00:00 EST. Please see our terms for use of feeds.

Home Depot sheds some dead weight originally appeared on BloggingStocks on Tue, 19 Jun 2007 15:15:00 EST. Please see our terms for use of feeds.

After all the posts about The Home Depot (NYSE: HD) and seeing so many comments about the condition of the stores, customer dissatisfaction and low employee morale, I started thinking about what management needs to do to turn things around. What would I do in this state of affairs? Only one thing came to mind. Leave the ivory towers and spend time in the stores. Not visiting, not inspecting, not for pep talks -- actually go to the stores and stock some shelves! Spend some time helping customers find what they need. Work at the customer returns counter. Work at the checkout counters. Help customers to their cars. Brown bag lunch with employees.

The Home Depot directors, officers, and senior managers need to actually return to the days of the owner getting his hands dirty. It's time to role up the sleeves and lead by example. No more reading reports to find out how things are going or visiting three stores in a day that have been prepped for your arrival. At this point, management needs to actually jump into the trenches with the troops and see the world from their perspective.

This is how Costco Wholesale (NASDAQ: COST) Starbucks (NASDAQ: SBUX) and Southwest Airlines (NYSE: LUV) grew strong, just to name a few. The leaders know from first hand experience what needs to be done because they have been there alongside employees and customers making sure they understood what it takes to build a successful enterprise and keep it that way. You cannot manage what you do not understand. When ex-CEO Nardelli left The Home Depot in January, he could have won a trophy for being the CEO most out of touch with customers, employees and shareholders on planet Earth. They could have used his likeness to craft the trophy itself.

I write this to remind management that there is no time like the present -- the time is NOW. Get to work -- real work! Then you will be able to turn the ship around. If not, you'll just leave a bigger mess for somebody else to clean up. Did I hear someone shout "spill on Aisle 3?!"

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well. Disclosure: I own shares in SBUX, as of this writing.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm.Check out his other posts for BloggingStocks here.

Home Depot management should stock shelves & help some customers originally appeared on BloggingStocks on Wed, 13 Jun 2007 16:15:00 EST. Please see our terms for use of feeds.

In addition to spinning off its supply business, Home Depot Inc. (NYSE:HD) should consider changing its name to Home Shleppo, a name my father-in-law invented. Shlep, for those of you not familar with Yiddish, means to drag along, which is exactly how the home improvement chain's shareholders have felt for a long time.

Home Depot's fourth quarter earnings, which are due Feb. 20, aren't going to be pretty. Profit is expected to be 51 cents compared with 60 cents a year earlier, according to Thomson Financial. Revenue is forecasted at $20.8 billion versus $19.5 billion.

Investors are going to want to know what new Chief Executive Frank Blake is going to do to undue the damage caused by his predecessor Robert Nardelli. He's got his work cut out for him.

I am the least handy guy in the world, but when I need to buy one of those things that you used to bang those little metal things into the wall, I had straight to Lowe's, which is about 10 miles further than the closest Home Depot.

Even handier people than me aren't finding much to like about the Atlanta-based company. Even considering the recent run-caused by the spin-off speculation, the stock is a dog. Since 2002, its shares have plunged 17 percent while Lowe's Companies Inc. (NYSE:LOW) rose 49 percent.

Investors shouldn't write off Home Depot quite yet. Remember when Sears Holdings Corp. was written off for dead? Now, it's far from it. Shares of Sears are up about 53 percent over the last year.

Also check out some other earnings reports that we're following, and let us know what you're expecting.

Maybe they should call it Home Shlepo originally appeared on BloggingStocks on Thu, 15 Feb 2007 07:30:00 EST. Please see our terms for use of feeds.

Home-Depot Inc. (NYSE:HD) will need an army of PR consultants to restore its tattered public image among investors and the public. I say "army" because one PR agency alone can't take on that Herculean task.

Former CEO Robert Nardelli set new standards for boorish behavior toward investors at the chain's last annual meeting. Investors are outraged at his arrogance and now are trying to stop the company from paying him a $210 million golden parachute.

Critics argue that Nardelli was overpayed, especially when factoring in the poor performance of its stock. House Financial Services Chairman Rep. Barney Frank said Nardelli's severance package was "further confirmation of the need to deal with a pattern of CEO pay that appears to be out of control," Reuters said.

Home Depot is in a pickle with regards to Nardelli's pay. It's also found away to turn off consumers as well. I haven't set foot in my local Home Depot in years because the experience of shopping in Lowe's Companies Inc. (NYSE:LOW) is so much more pleasant. The Lowe's is about 20 miles further from my house than the Home Depot.

In the coming weeks, PR firm after PR firm will be pitching their services to Home Depot. There will be a reputation-building advertising campaign in the spirt of what Wal-Mart Stores Inc. (NYSE:WMT) is doing. Executives will probably hit the road to New York and Boston and listen to shareholders yell at them. Then the public will move onto the next scandal.

--Jonathan Berr is editor of http://www.desperateinvestors.com.

Home Depot's tattered image needs an army of PR consultants originally appeared on BloggingStocks on Thu, 11 Jan 2007 08:45:00 EST. Please see our terms for use of feeds.

Bob Nardelli put The Home Depot Inc. (NYSE: HD) at a sustainable competitive disadvantage. The choice of new CEO Frank Blank, an M&A lawyer with no retailing experience, suggests that its board is out of touch with key constituents. And investors should consider dumping Home Depot and buying Lowe's Companies (NYSE: LOW) -- which is exploiting Home Depot's self-inflicted weaknesses.

The upshot of a flood of media coverage is that Nardelli got canned for three reasons:

• Refusing to link more of his pay package to the stock price. BusinessWeek leads with an insightful interview suggesting that the straw that broke the camel's back was Nardelli's refusal of a board request that he "tie his future stock awards to shareholder gains."
• Giving the back of his hand to shareholders at the 2006 annual meeting. Shareholders were furious when he bulldozed through last May's annual meeting in 30 minutes -- excluding Home Depot directors and cutting off shareholders' questions after one minute.
• The decline in the stock price. During Nardelli's tenure HD fell 6% while LOW rose 200%. His $245 million in compensation -- coupled with the $210 million he got for going away -- is absolutely vomit-inducing in light of the weak stock performance.

Continue reading Investors should shop at Lowe's

Investors should shop at Lowe's originally appeared on BloggingStocks on Thu, 04 Jan 2007 10:47:00 EST. Please see our terms for use of feeds.

So Home Depot Inc.'s (NYSE: HD) CEO Bob Nardelli has resigned. Is it time to buy the stock? This depends on whether current vice chairman and new CEO, Frank Blake, has what it takes to fix the company and to a lesser extent how investors react to the outrageous $210 million the board paid Nardelli to go away.

Nardelli made $245 million while cutting 40% from HD's market capitalization [subscription required]. After reading the comments from current and former employees on my post last month, highlighting the $30 million Nardelli got in 2005, I was struck by an overpowering sense of how he has damaged Home Depot. Nardelli stripped the stores of inventory that customers wanted to buy and pushed out employees who knew how to run each store to meet the specific needs of local customers.

This notion of centralizing purchasing and merchandising to achieve economies of scale is a typical General Electric Company (NYSE: GE) inspired approach to fixing a business. In the case of Home Depot, it was the perfect formula for destroying the local responsiveness and family orientation to employees that made Home Depot great. New CEO Blake was deputy secretary of the U.S. Department of Energy after a 10-year career with GE, where he worked with Nardelli.

With HD up 3.26% just before the opening bell this morning, I think investors are overreacting because Blake is likely to give Home Depot more of the same.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College. He owns GE stock and has no financial interest in Home Depot.

With Nardelli leaving, is it time to buy HD? originally appeared on BloggingStocks on Wed, 03 Jan 2007 09:45:00 EST. Please see our terms for use of feeds.

The Home Depot Inc. (NYSE:HD) announced that Bob Nardelli has mutually agreed with the company to step down as Chairman and CEO of Home Depot. If you will recall, Mr. Nardelli was one of the top 10 CEOs that I thought needed to leave.

As predicted, HD shares are trading up some 5% pre-market at $42.25. As I noted, he could even take a huge severance and the street would be happy to see it. Nardelli will not compete with Home Depot for 1 year and will leave with some $210 million in severance.

Frank Blake, the Company's current vice chairman of the Board of Directors and executive vice president succeeds Nardelli, effective immediately. Frank Blake was elected chairman and CEO of The Home Depot and a full voting member of the Board of Directors. The Board also announced that Carol Tome, the Company's current executive vice president and CFO, and Joe DeAngelo, the Company's executive vice president, HD Supply, will be assuming additional responsibilities.

Continue reading Nardelli leaves Home Depot with $210 million

Nardelli leaves Home Depot with $210 million originally appeared on BloggingStocks on Wed, 03 Jan 2007 09:20:00 EST. Please see our terms for use of feeds.

Ten CEOs who need to leave originally appeared on BloggingStocks on Tue, 19 Dec 2006 16:31:00 EST. Please see our terms for use of feeds.

This post is written as part of AOL Money & Finance's Best & Worst 2006. Vote for Bob Nardelli or check out the other overpaid CEOs.

Former General Electric Company (NYSE: GE) executive Bob Nardelli lost out to Jeff Immelt in the race to succeed Jack Welch as CEO. And The Home Depot Inc. (NYSE: HD) shareholders would have been better off if Nardelli had repotted himself elsewhere.

Since Nardelli joined Home Depot as CEO in December 2000, HD is down 40% compared to a 120% increase for competitor Lowe's Companies Inc. (NYSE: LOW). In the last five years, Home Depot's revenue grew at a 12.3% compound annual growth rate to $90.1 billion and its net income increased at a 17.7% annual rate to $6.1 billion -- not bad, but a far cry from Lowe's 18.2% revenue growth and 27.8% profit growth during the same period.

And all this inferior performance at Home Depot would not be so bad if Nardelli weren't so egregiously overpaid. He received roughly $30 million in 2005, almost six times the $5.5 million that Robert Niblock, Lowe's CEO, took home in 2005.

Investors in the market for bargain CEOs should stay away from Home Depot.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, and a Professor of Management at Babson College. He owns GE stock and has no financial interest in Home Depot or Lowe's.

Best & Worst: Bob Nardelli builds himself a fat pay plan at Home Depot originally appeared on BloggingStocks on Tue, 05 Dec 2006 18:00:00 EST. Please see our terms for use of feeds.

When stocks rise on seemingly bad news, it is a "pretty good indication" that the stock has bottomed, observes Chuck Carlson, editor of The DRIP Investor.

In this case, the stock that may have bottomed is Home Depot (NYSE: HD), which has held up well despite poor earnings, poor guidance, and generally poor prospects for the housing sector.

The company recently reported a 5% drop in same store sales, notes Carlson, and the "pain" is expected to continue into 2007. For the fiscal fourth quarter, the company has forecast a 12% to 16% drop in earnings per share and a gross margin decline.

Says Carlson: "Despite the tough earnings report and weak near-term outlook, these shares held tough and even bounced a bit on the news."

Meanwhile, the advisor sees "ample value" in the shares and expects the stock to perform much better in the year ahead. He also notes that the firm "sweetened the dividend pot" for its shareholders by recently announcing a 50% increase in the dividend. Indeed, he points out, this was the second time in 2006 that the company boosted its dividend 50%.

Incidentally, in Carlson's newsletter, DRIP refers to dividend reinvestment plans; his service focuses exclusively on quality stocks that offer these programs. DRIPs provide a low-cost way for individuals to acquire shares. For example, at Home Depot, the company's direct-purchase plan has a minimum initial investment of $500, with subsequent investments that can be as little at $50.

Steven Halpern is the editor of TheStockAdvisors, a free daily overview of the latest investment ideas from the financial newsletter community.

Home Depot: Has it reached a bad news bottom? originally appeared on BloggingStocks on Wed, 29 Nov 2006 21:30:00 EST. Please see our terms for use of feeds.

Home Depot got quite a lift yesterday in response to its second quarter earnings report. The stock rose $1.18, up 3.55%, to close at $34.44. The news from Atlanta was good, if modest. Q2 2006 net earnings were up 5.3% to $1.86 billion, versus $1.77 billion in Q2 2005. On the basis of Q2 2006 earnings, Home Depot has scaled back its full year sales growth figure to 14% and has reduced projected earnings per share growth to 10% -- both at the lower end of its range in January 2006.

Bowing to widespread customer complaints about a decline in customer service, Home Depot CEO Bob Nardelli outlined several new initiatives, including budgeting for 5.5 million associate work hours for the second half of 2006. There was no indication how many more hours this figure represents beyond current staffing levels. Home Depot will also introduce a 24-hour customer service hotline: 1-800-Home Depot. By year-end, all Home Depot stores will have one or more customer self-checkout lanes.

There were several flies in today's ointment, however. One was the announcement that Home Depot owes $69 million in retroactive taxes in Quebec due to a change in tax laws. Also, Home Depot is involved in an SEC investigation into its stock option procedures. The company is also named in at least one lawsuit pursuant to those stock option procedures. Home Depot stated that it does not believe these legal actions will have a material adverse impact.

Results of Home Depot Q2 Earnings Call originally appeared on BloggingStocks on Wed, 16 Aug 2006 08:01:00 EST. Please see our terms for use of feeds.

In a recent post, I mentioned that two stock analysts still rate Home Depot as a BUY based on a number of financial factors. Numerous readers responded with accounts of negative individual shopping experiences at Home Depots around the country.

It is important to remember that Home Depot revenues in 2005 were $80 billion. That figures represents millions of transactions, a percentage of which are not going to go well. Does that mean Home Depot is a poorly run company?

Far from it. Earnings per share have doubled from $1.10 to $2.72 during the past five years. Home Depot has paid out $15 billion in dividends and opened an additional 900 stores, all under CEO Robert Nardelli.

Investors may wish to read two recent articles on Nardelli's role in guiding Home Depot. As part of damage control from the fiasco of the May annual meeting, Nardelli was interviewed by Maria Bartiromo in Business Week, 24 July 2006. Nardelli accepts full responsibility for the debacle of the meeting.

He also breaks down the components of his$245 million pay package. Nardelli is very proud of the direction Home Depot is now taking, relying on professional contractors for more than 30% of revenue, a segment Nardelli plans to increase, though possibly at the expense of customer service to individual do-it-yourselfers.

When asked point blank about the decline in customer service at Home Depot during his tenure, Nardelli denied there has been any deterioration. "You wake up every morning focused on customer service... The stores are brighter, cleaner, and more navigable." Home Depot also plans to spend $600 million on training for orange-apron employees.

Much less self-serving is an article by Ram Charan, "Home Depot's Blueprint for Culture Change," in Harvard Business Review, April 2006. Charan worked with Nardelli and other Home Depot senior executives during the transition period when Nardelli became CEO in 2000. The focus of this article is on the systematic changes in metrics, processes, programs and structures Nardelli has instituted throughout Home Depot in order to acquire reliable data across the company. This is the first step in building a culture of accountability. Nardelli's decision-making style is almost entirely data driven. Charan provides much information on the way Home Depot now collects, disseminates and incorporates various data in its strategic planning.

Home Depot Customers vs. Home Depot Investors originally appeared on BloggingStocks on Wed, 26 Jul 2006 23:13:00 EST. Please see our terms for use of feeds.