A Monkey on Symbol Technologies' Back

Investment results, like much that happens in our lives, are the product of our choices. Why do some people choose to live in a bad neighborhood and then act surprised when their car is vandalized or their home is robbed? Why do people buy stock in bad companies? Who knows what compels people to make bad choices? But that's why your great stock pick doesn't always do what you think it should be doing. Nobody said markets, or people, are rational.

Symbol Technologies (NYSE: SBL  ) climbed nearly 20% today on a positive outlook and stronger-than-anticipated first-quarter earnings report released after yesterday's close. The bottom line turned around to a profit of $6.8 million, or $0.13 a share, from a year-earlier loss of $31 million, or $0.13 a share. And revenue climbed to $420 million from $386 million. Ignoring onetime charges related to income-tax payments and negotiations in an ongoing government investigation into previous fraudulent accounting practices, the maker of barcode scanners and specialized wireless computing devices earned $20.3 million.

But, I haven't seen any evidence to suggest that companies with significant problems tend to improve significantly after getting caught. Typically, the problems they are caught for are the tip of the iceberg and there are other problems underlying and deeply ingrained that permeate throughout the company. The leaders simply make bad choices and aren't likely to suddenly clean up their act and start making great decisions.

Look at Electronic Data Systems (NYSE: EDS  ) . It's had the same sorts of problems over the years. Do you suppose that the same bad decision-making it had regarding its finances also compelled it to take on contracts it shouldn't have? The list of such companies goes on and on.

Who knows what problems are embedded into Symbol. I could be wrong, but there's no way to be sure, and given the choice between investing in a company with a clean record and equal growth potential and a firm like Symbol with its ongoing investigations, I won't apologize for taking the former of the two choices every time.

Another Fool recently came to the opposite conclusion about companies cleaning up their act, and cites a couple cases where that may be true. It's a subject worthy of more in-depth analysis.

Join the Fool Community for 30 days free to explore discussion boards about anything and everything.

Fool contributor Mark Mahorney doesn't own shares of any companies mentioned.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 507637, ~/Articles/ArticleHandler.aspx, 10/25/2016 6:45:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,169.27 -53.76 -0.30%
S&P 500 2,143.16 -8.17 -0.38%
NASD 5,283.40 -26.43 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
EDS.DL $0.00 Down +0.00 +0.00%
2020 ChinaCap Acqu… CAPS Rating: No stars
SBL.DL2 $0.00 Down +0.00 +0.00%
CAPS Rating: No stars