This Week's 5 Dumbest Stock Moves

Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. Let's take a look at five dumb financial events this week that may make your head spin.

1. United we strand
Technology dealt United Airlines parent UAL Group (NYSE: UAL  ) a big blow this week -- even bigger than the insane $15 fee on the first checked piece of baggage. An article detailing the carrier's bankruptcy back in 2002 resurfaced as an undated item on a Tribune paper's website. The popular Google News portal picked it up, sending shares of UAL into a freefall as investors bailed under the assumption that the shares would eventually be rendered worthless.

Tribune and Google (Nasdaq: GOOG  ) are pointing fingers at one another, but poor UAL. Reports of its death weren't exaggerated, they were erroneously duplicated.

2. Alphabetically, it should be A before Z
What was Microsoft (Nasdaq: MSFT  ) thinking? It released details of its updated Zune line -- exactly one day before Apple (Nasdaq: AAPL  ) won back the world’s attention with a refresh and a round of price-cutting on its industry-leading iPod digital-media players.

Let's go over this again. Apple sent out an invitation for a media event on Tuesday. Apple's only hint was a "Let's Rock" theme. Obviously this was going to be fresh iPod news. What did Mr. Softy think, that Apple was about to get into archaeology or enter the home rock-wall market? It should have waited, checked out what Apple had to offer, then come back quickly to top it.

Unfortunately, it didn't. Instead, it willingly stepped on the rug that Apple pulled out from under its feet.

3. I love you, I love you not
Chinese online gaming pioneer Shanda Interactive (Nasdaq: SNDA  ) channeled Sybil on Monday with a chin-scratching, split-personality move. Four minutes after the company announced a $200 million share buyback, it put out another press release, detailing a $130 million convertible senior note that it's issuing to help bankroll the repurchase.

Borrowing money to pay for a buyback is questionable, but honorable. Pegging that borrowed money to a share-dilutive convertible vehicle is self-defeating. Perhaps the biggest puzzler here is that Shanda's balance sheet closed out its latest quarter with $513 million in cash.

4. Spore or less
Electronic Arts (Nasdaq: ERTS  ) had a lot riding on Sunday's release of its highly anticipated Spore computer game, and I'm not even talking about the hype itself. Critics quickly went from praising the gameplay to bashing the digital rights management features of the game, which limits freely installed copies and communicates with EA's server behind the scenes.

We get it, EA. We live in a world of petty thieves. It's a pity that you couldn't use Spore to create an entirely new civilization of do-gooders in which to operate financially. However, don't you get it? If you go too far with the copy protection, you risk alienating the honest people, too. They’ll get tired of jumping through the hoops and walking through your virtual metal detectors.

This is your brand at stake, gang. If you burn enough diehard gamers, they won't just get even -- they won't get Madden.

5. Don't pick sides, Starbucks
It won't be just beans percolating at your local Starbucks (Nasdaq: SBUX  ) , now that the company has teamed up with Good magazine to offer an in-house read of provocative topics. The self-funded publication doesn't aim to be partisan, but we'll have to let the latte-sippers judge for themselves. Starbucks better hope that any political or environmental issues covered are handled with balance. If not, it may alienate roughly half of its audience.

Even more head-spinning is the possibility of "discussion nights," where patrons will be encouraged to partake in healthy debates of current events. You may appreciate the activism in theory, but how well do you think it will fly when someone with a Frappuccino craving walks unknowingly into a corner Starbucks that happens to be in the midst of a heated debate on Social Security or Darwinism? Will Starbucks employees have to bolt chairs to the ground in case fights break out? If this evolution means that Starbucks will become an aromatically pleasant version of The Jerry Springer Show, you'll find me outside, making a mint peddling Bad magazine.

Let's beat the Dumb drum:

Starbucks and Microsoft are Motley Fool Inside Value recommendations. Shanda and Google are Motley Fool Rule Breakers picks. Starbucks, Electronic Arts, and Apple are Motley Fool Stock Advisor picks. The Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz is a fan of dumb and smart business moves. Investors can learn plenty from both. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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