The Grimm Reaper

Office Depot: Another Retail Sector Tragedy?

Office Depot is not in trouble jus because of the massive failure of is retail division. What most analysts fail to understand in that 52%of Ofice Depot's revenue comes from the Business Solutions Division (BSD), the contract/delivery arm of OFFICE DEPOT.
Of total BSD sales, $1.4 billion is in the public sector, or contract government sector. Currenly, scathing audit reports by the states of GEORGIA, NEBRASKA NORTH CAROLINA AND CONNETICUT, have caused widespread concern throughout OFFICE DEPOT'S entire base of government business. In April of 2008, an ex-senior account manager for BSD, came forward with allegations to STATE & FEDERAL authorities that OFFICE DEPOT, was engaged in a wide ranging scheme to violate certain large government contracts and agreements with systematic overcharging. The ATTORNEY GENERAL OF FLORIDA, after being presented with a detailed presenaion of the allegations opened a full blown FRAUD INVESTIGATION of OFFICE DEPOT. The highly specialized, ECONOMIC CRIMES DIVISION, of the Florida Attorney General's Office, is well into their second month the investigation. Additionally, federal agencies have launched their own inquiries. The lucrative US Communities/Los Angeles County/Office Depot, national contract for school and office supplies is at serious risk, as the investigation claims over $70 million dollars per year in overcharges on this $700 million dollar a year (annual) agreement used in all 50 states by state and local government agencies. OFFICE DEPOT has failed to disclose the contigent liabilities associated with these investigations in their financial statements as required, as such, the Securities and Exchange Commission is now conducting a preliminary inquiry. Office Depot should see a serious degrading of all their core government business in the second half of 2008, with civil and criminal action on the horizon concerning their government sector of business. STOCKHOLDERScanalso be expected to launch a class action lawsuite as details of the investigations become more public.