More Hacking for Your Enjoyment (Part 1)

 

Over the last couple of weeks, there have been a couple of new security hacks.

One is the celebrity hack of the Apple iCloud system, which I will discuss next time and how Apple will be bad for Staples. Along with that I will discuss the Apple hack itself and the whole privacy thing relating to images. I will say right now that that post will have a reader warning because of the content of the post. I am just preparing the readers now for what could be a possibly offensive post.

Anyway, the subject of this post is the hacking of Home Depot.

As someone who once worked at the late competitor Horny Quarters. Oops, I mean Home Quarters. I will discuss in a future post why I call it Horny Quarters, but for now on with the comparison.

Like Home Depot, Home Quarters was a home improvement store that specialized in virtually everything you need to build, remodel, and maintain a home or other structure. These types of stores carry everything from nails to lumber to appliances. Of course, if you did not know that already, you probably live in a box.

It has been reported that Home Depot was hacked back in April of this year and was not discovered until a couple of weeks ago. This means that several months had passed where this hack took place. It has just been reported up to 56 million cards could have been put at risk, which possibly makes it larger than the attack on Target last year.

As a 7 week employee of Home Quarters as a cashier, I noticed that transactions varied in size from just a couple of dollars for a person buying a hammer and nails to someone buying what seemed to be endless amounts of lumber and other assorted products that added up costing thousands of dollars at the checkout.

Cash was a rarity for form of payment, however, as well as checks both personal and business. Most of the transactions were made by credit card. The majority of the cards were business cards, but about a quartet of the transactions was made by personal credit cards.

Any way you look at it, the hacking of credit cards at a home improvement store could be a boon to anybody who successfully hacks the system. It was not uncommon to have sales in excess of nearly $50,000 in transactions after a 5 or 6 hour day. Of course a longer day would bring that number up by another few thousand dollars.

The biggest problem that I saw as a bad trend with most of the business transactions was that most people didn’t care how much they were spending and really never cared how much they were being charged for any of their items. This presents the scary situation that these same people never check their credit card statements for any possible fraudulent usage.

I believe that is this type of ignorance that creates a hack attack like this to last as long as it did. Add to this the fact that most companies don’t have antivirus software on their machines nor do they update the software on a regular basis and you have the perfect recipe for the type of disaster that has plagued Home Depot, Target and others.

Overall, the hacking will never end as long as systems go unprotected and I still believe that Staples will get hacked eventually if not sooner.

Unless of course it has happened already and they are too ignorant to realize it.

Future Mergers?

A couple of weeks ago, Staples announced their quarterly earnings.

Most of the transcript that I read sounded more like the type of gloom and doom that was expected from the company.

Sales are not as good as they have been.

The company wants to shut about 140 stores by year’s end.

The company is shrinking the floor space of their stores as they try to downsize their footprint in the retail world.

And finally, the company is not using weather as an excuse this last quarter for its dismal performance.

So with so much bad news, isn’t it funny that a little bit of sarcasm was injected into the last quarter’s report conference call?

Simply put, one caller wanted to see if putting a Starbucks into Staples stores might help improve traffic and make people want to shop there.

Certainly such an idea should and was laughed off as some sort of joke but truth be told that the company has to do something to help it try to survive in the future.

After this report came out, the company’s stock took a smaller hit than normal, but was still down. However over the last couple of days the stock has gone up to nearly $13/share. So what is happening with the company?

It seems as though Credit Suisse thinks that a Staples/Office Depot would be great for both companies. They assume that the stock would go up to $30/share and that the remaining 2 companies would work great together.

However, I don’t believe this for one moment. The truth is that a merger was denied by the federal regulators last time and I don’t think it would happen now either, so all these people are going on false pretenses of something that could never happen. I expect that the bubble will burst soon in this stock sending it plunging below $10/share very soon.

It may come as late as next earnings report as it seems that the back to school season looks more like bust than a boom.

Why do I say that you ask? Here are some of my observations locally (of course without stepping into a Staples store):

· The Staples ads have been awful this BTS season. People dancing and jumping around just made me nauseous. Nothing was memorable in any of the ads. Target and Walmart ads were no better and quite forgettable.

· Plenty of knapsacks and lunch bags still available at Target and Walmart. This is a sure sign that kids will be using last year’s gear for another year. Unfortunately, this year it seemed that licensed products were quite limited and seems to be a repeat of merchandise of years past.

· Plenty of general school supplies like pens, pencils and paper. Again, it seems parents over bought last year so they have plenty.

· One stop shopping. Forget the ads as everyone seems to be price matching everybody else.

· It seems that from the ads that Staples got rid of that horrible shopping pass that they had the last couple of years. Who really would pay to get a discount? Hopefully that never comes back again.

I don’t believe that any of the stores will have a great back to school season as it seems even this late in the season there is still more than plenty of product on the shelf.

Maybe a Starbucks/Staples/Office Depot merger might be a better idea.

Or maybe not.

Update on Market Basket:

Last time I said that Arthur T. Demoulas wanted to buy the company. Well, since then, he bought the company for $1.5 billion and it seemed almost immediately that the company came back to life.

Our family visited the local store this week and found the store about 70% restocked, but there were many products on the shelves that were at or near their expiration dates. I believe that it will be about another couple of weeks to get new products on all their shelves. However, it seemed nice to shop at a store where employees actually like to work unlike companies like Staples. Market Basket is a model company where the employees are actually happy on their job and it definitely shows.