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. Netflix will work for Jobs
After nearly two years, Netflix (Nasdaq: NFLX  ) is finally correcting a glaring oversight, by making its online movie streaming service available to Apple (Nasdaq: AAPL  ) Mac users. The upgrade to its media player software platform will now give many Apple users the ability to watch thousands of titles from the growing Netflix library on their Web-tethered computers.

This is actually a smart move, but it makes our list this week because it took Netflix so long to come through. Since the company doesn't charge extra for the streaming video, beyond its monthly subscription fees, Netflix could at least have given Mac users -- or those with no interest in Web streaming -- some sort of price break. The company's recent move to raise fees for those who prefer Blu-ray discs shows that Netflix is willing to differentiate its pricing based on usage (beyond the different plan limitations).

But why pick at a scab that's finally healing? Well done, Netflix. It's about time!

2. Doh! nut
Krispy Kreme (NYSE: KKD  ) wants in on the presidential-election fervor. Come next Tuesday, the decadent doughnut maker will be giving out free star-shaped doughnuts with red, white, and blue sprinkles to anyone coming in with an "I Voted" sticker.

Krispy Kreme is actually calling this "a patriotic doughnut that will remind you just how tasty freedom really is." I'm not sure if it hired someone from The Colbert Report to write the press release copy, or if it's even self-aware enough to pick up on the sarcasm that it's spewing. Krispy Kreme is rewarding politically engaged voters by handing them an artery-clogging treat? This isn't patriotism. This is a terrorist act!

I'm just kidding -- I love Krispy Kreme dougnuts. I'll probably head out there on Election Day, handing out "I Died of a Heart Attack and/or Diabetes" stickers for patriotic doughnut-chompers to slap over their "I Voted" labels.

3. A quarter for your thoughts
It's not every day that you see an analyst issue a price target of $0.25 on a stock, but that's just what Goldman Sachs analyst Mark Wienkes did this week to Sirius XM Radio (Nasdaq: SIRI  ) .

Pocket-change price targets are rare because analysts don't follow penny stocks. With roughly 3 billion shares outstanding, Sirius XM is not a penny stock. I wonder what will become of Wienkes' target if Sirius XM goes through with its plans for a reverse stock split later this year. Even a higher adjusted price won't diminish the ridiculousness of a transient $0.25 price target. Come on, Wienkes! Be bold, and make it an ice cold zero -- or change your mind and really jack up that target.

4. Hey Mr. Softy, get off of my cloud
Microsoft (Nasdaq: MSFT  ) rolled out Azure this week. Despite the hokey name, it represents the company's push into hosting third-party cloud-computing applications. I have a few beefs with this.

  • The name. It has the affinity-brand allure of the maligned Vista and the struggling Zune, and we know how well those products have turned out for the company. Why not keep it Windows 7 simple, like Microsoft Cloud?
  • The resignation. Microsoft is a company that prides itself on its advantages in PC-served software solutions. Jumping into the server-hosted revolution, as it has in recent months across its product lines, validates a niche that is leveling the playing field once slanted in Microsoft's favor.
  • The move. Does Microsoft know what it's doing here? It's butting heads against some heavy-duty tech bellwethers, some of them friends who may now become enemies. How is Microsoft supposed to compete against Amazon.com (Nasdaq: AMZN  ) , which has spent years winning IT street cred with its web services?

5. Taking retreads to the zoo
From the "it keeps getting worse" file, Travelzoo (Nasdaq: TZOO  ) posted its third-quarter results this week. Over the past few reporting periods, the travel-deals publisher has been stung by its inability to offset domestic tax bites with losses incurred abroad.

  • The problem first appeared in last year's fourth quarter, when the effective tax rate of 98% implied that nearly all of the profits were wiped out by Uncle Sam. Could things get worse?
  • Indeed they could. In the first quarter of this year, the company paid out more in taxes than it rang up in pre-tax profits, for an effective tax rate of 164%. It couldn't get worse than that, right?
  • Well... during the second quarter, the difference grew wider, with an effective tax rate of 168%. OK, no way it can possibly get even worse.

But in this week's third quarter report, it did. The company combined its still-hefty tax burden with a pre-tax operating loss. Ouch! I think I need a vacation.

Let's beat the dumb drum:

Microsoft is a Motley Fool Inside Value recommendation. Netflix, Amazon.com, and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters services free for 30 days.

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


Read/Post Comments (7) | Recommend This Article (2)

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.

  • Report this Comment On October 31, 2008, at 3:07 PM, DemianBohemian wrote:

    This is the your 4th worthless article today with the ticker symbol SIRI in it. I know you guys are fishing for hits to your website, but come on! This is just getting silly. You guys were recommending XM to your paid subscribers at over $30 a share and now you slam the combined company at .34 on an almost daily basis. What is your agenda? Your pump and dump ways are starting to be too obvious...

  • Report this Comment On October 31, 2008, at 3:28 PM, kingfrogcash wrote:

    Every knows except Motley Fool that Goldman Sachs has shorted SIRI and owns it's debt. A clear conflict of interest to the analyst. He has lowered the target several times wihout having seen the SIRI earnings. A take down by the GS trading desk.

  • Report this Comment On October 31, 2008, at 3:46 PM, J56D wrote:

    Your 4th worthless article today referencing SIRI makes you look like goldman sachs' BITCH. With everything going on in the market your writting is pathetic.

  • Report this Comment On October 31, 2008, at 3:49 PM, J56D wrote:

    Barrington analyst Jame Goss has rated Sirius XM Radio as OUTPERFORM

  • Report this Comment On October 31, 2008, at 4:24 PM, Andrew277 wrote:

    Motley fool is nothing but a mouthpiece for GS.

  • Report this Comment On October 31, 2008, at 7:05 PM, stoparistotle wrote:

    RICK LOVES TO BASH SIRIUS.

    CBS IS 100 X LARGER AND CHECK AND SEE WHAT HE DOES WITH THEM OR ANY OTHER RADIO STATION. CBS JUST LOST 12 BILLION. NOT ONE ARTICLE ON THEM.

    ******Please someone from the SEC check this guy out. He continually targets this company.*** I can't prove anything on him but I can do nothing but wonder why he targets this company ********

    He tries to trick us with positive articles but they're really backhanded. ex... save sirius.

    If you would shut up and leave this stock alone it would go back up.

    DO YOU WORK FOR THE NAB? GO BASH CBS AND YOUR NAB BUDDIES.

    PLEASE CHECK OUT HIS POSTING HISTORY TO SEE HIS BIAS AGAINST THIS COMPANY. HE BRINGS UP THE SAME THING OVER AND OVER AND OVER

    THEY WILL REFINANCE THEIR DEBT.

    I CAN'T STAND YOU RICK. I QUESTION YOUR INTEGRITY.

  • Report this Comment On November 03, 2008, at 3:49 PM, Eekare wrote:

    Wow... I can't believe people think this is a Sirius bashing article. He's bashing a GS analyst for even bothering to "downgrade" Sirius to .25. Looks more like he's bashing the analyst moreso than Sirius considering the title of the article is "This Week's 5 Dumbest Stock Moves".

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