UPDATE 3-Office Depot CEO steps down; shares rise

* CEO Odland leaving Nov. 1; director to be interim chief

* Says prelim Q3 sales $2.9 bln vs Street view $2.95 bln

* Says prelim Q3 EPS 18 cents vs View 3 ct loss/share

* Shares up 7.6 percent in morning trading
(Adds earnings outlook, updates share movement)

By Phil Wahba

NEW YORK, Oct 25 (BestGrowthStock) – Office Depot Inc (ODP.N: ) said
on Monday that its embattled chief executive will step down
next month and reported preliminary third-quarter earnings that
beat Wall Street expectations, sending shares up nearly 8
percent.

Steve Odland, who last week settled improper disclosure
charges with U.S. regulators, will resign as chairman and CEO
on Nov. 1 and be replaced on an interim basis by a company
director.

“This is a relief rally,” said Anthony Chukumba, a senior
research analyst with BB&T Capital Markets, commenting on the
share movement.

“It has 100 percent to do with the CEO leaving,” he added,
pointing to what he said was “a series of strategic and
financial missteps” such as profit forecast misses on Odland’s
watch.

Office Depot shares were up 35 cents, or 7.6 percent, at
$4.98 in late morning trading. Shares have fallen by nearly
half since hitting a 52-week high in late April.

Last week, Odland, the company and a former Office Depot
executive said they will collectively pay more than $1 million
to settle U.S. Securities and Exchange Commission charges of
improper disclosures. [ID:nN2196976]

The SEC accused Office Depot, Odland and former chief
financial officer Patricia McKay of conveying to analysts and
big investors that the company would not meet analysts’
earnings estimates for the second quarter of 2007.

According to the SEC, company executives discussed how to
encourage analysts to revisit their second-quarter forecasts.
Office Depot then signaled to analysts it would not meet
expectations and analysts lowered their estimates.

Odland, 52, has been CEO since 2005, and will remain as a
consultant during the transition, until Dec. 31.

Office Depot, which is expected to report full results on
Wednesday, expects to report sales of $2.9 billion for the
quarter, ended on Sept. 25, down 4 percent from a year
earlier.

The office supplies retailer also said it expects to report
third quarter net income of $54 million, or 18 cents per share,
compared with a year-earlier loss of $413 million, or $1.51 per
share, a year earlier.

Analysts on average are expecting a loss of 3 cents per
share on sales of $2.95 billion, according to Thomson Reuters
I/B/E/S.

Neil Austrian, an Office Depot director since 1998, will
act as interim chairman and CEO while Office Depot looks for a
new chief. Austrian previously served as an interim CEO at
Office Depot from late 2004 until March 2005.
(Reporting by Phil Wahba; editing by John Wallace, Derek Caney
and Gunna Dickson)

UPDATE 3-Office Depot CEO steps down; shares rise