The Important Lesson of Staples’ Fall is Technology Destruction

NEW YORK (TheStreet) -- Technology is creative destruction in action.

Take Staples (SPLS) . In the 1990s, the stock was a highflier, a classic big-box store that was devouring technology retailers. That made sense, because office-supply stores were the first technology super-centers, offering adding machines, cash registers and typewriters a century ago, when those were new ideas.

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Staples' shares peaked again, near the end of the housing bubble in 2007, at more than $27, giving the company a valuation of more than $17.5 billion. It's now at $8.1 billion.

The shares got a pop on Tuesday to $12.63, after a Credit Suisse analyst speculated that the company might merge with rival Office Depot (ODP) , which had swallowed OfficeMax.

Staples' stock was trading Wednesday morning at $12.86, up 1.9%. The shares have fallen 19% year to date, compared with a 3.4% gain for the Dow Jones Industrial Average.

Office Depot and Staples have been moving in tandem for some time, and Office Depot reiterated its earnings forecast Tuesday. It expects lower sales than last year.

Maybe Staples should have gone into 3-D printing, or services, and it has tried to expand into postal services against UPS (UPS) and FedEx (FDX)  .

What matters to investors is that Staples is closing stores and warning of lower sales.

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