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
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 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
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
- 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
- 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: