Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.
1. South by Southwest
Sometimes even Southwest (NYSE: LUV ) has to sleep with the devil.
The no-frills budget carrier is introducing a $10 fee to board its flights early. Southwest doesn't assign seats to its ticketed passengers, so it's a clear benefit to be one of the first on the plane to pick out a choice window seat or get away from drooling sleepers or colicky infants.
The problem is that Southwest has ridiculed legacy carriers for instituting baggage fees and other passenger-squeezing charges. Now it comes in with a new fee that no one else appears to be charging. It also creates a caste system that Southwest has historically avoided.
After all of the ads mocking the competition, Southwest just provided its flying rivals with ammo.
2. Bon Vonage
Shares of Vonage (NYSE: VG ) opened 44% higher on Wednesday, after the struggling online telco announced that its application for Apple's (Nasdaq: AAPL ) App Store was approved.
Good news? Not so fast. Details are skimpy on what the Vonage mobile application actually does. Probably the most important thing to remember is that the iPhone doesn't allow apps to open on their own, so it's not as if Vonage customers can use this to receive incoming calls. I also can't imagine Vonage rival AT&T (NYSE: T ) signing off on a deal that would eat into its carrier minutes on its own network. If the Vonage is limited to working only on Wi-Fi, it would be practically useless.
Don't tell that to Vonage, though.
Vonage went through the chest-thumping hassle of putting out a press release for the mystery app, even though "general availability will be announced at a later date."
Gravity eventually caught up with the stock, and it had given back most of its Wednesday morning gains by yesterday's market close.
3. Boys to Meme at Yahoo!
Fickle and impatient Yahoo! (Nasdaq: YHOO ) launched a microblogging site -- Yahoo! Meme -- in English this week. It had been offered in Spanish and Portuguese flavors earlier this summer.
The site looks slick, with users able to go beyond Twitter's limitations by posting videos, audio, and snapshots. Smaller sites are doing similar things, but Yahoo!'s name commands attention.
Attention isn't always a good thing, though. After all, who would invest the time and effort to register for a Yahoo! Meme account when the online giant has a history of abandoning user-generated sites under its watch, including Mash, GeoCities, Yahoo! Photos, and Yahoo! Briefcase?
Until Yahoo! shows enough respect to not shutter projects, it's going to face smaller crowds with every new rollout.
4. I think Icahn
Sometimes, prolific Yahoo! shareholders get the urge to abandon unpopular products, too. Billionaire investor Carl Icahn has sold a chunk of his stake in Yahoo! and settled for less than $15 a share.
Icahn initiated his position in the mid-$20s last year, in hopes of cashing in on the Microhoo mania. As an activist investor, Icahn thought he could bring both sides back to the table and cash out in the mid-$30s. He bought in just as the world's largest software company was throwing in the towel.
Is Yahoo! really worth that much? His decision to cash out in the low teens says it all. Now let's see whether he sells the rest of his position before Yahoo! Meme meets the axe.
5. A million specks of nothing
The financial media can have a pretty big imagination sometimes.
Wal-Mart (NYSE: WMT ) was all but christened the second coming of Amazon.com (Nasdaq: AMZN ) after it announced the addition of a million items to its virtual storefront.
Just check out some of the headlines:
- "Wal-Mart Pushes Deeper Into Amazon E-Commerce Territory" -- San Francisco Business Times
- "Wal-Mart Stakes a Claim to Amazon's Turf " -- TheStreet.com
If this sounds impressive, consider that all that Wal-Mart did is broker a deal with three online retailers -- eBags, CSN Stores, and Pro Team -- to offer their wares through Walmart.com.
It's not as if Wal-Mart is warehousing any of these items, either locally or at its central warehouse. The leading real-world retailer is simply passing the order on to the merchant.
Walmart.com isn't any closer to Amazon.com's turf. It just became a glorified affiliate marketer with benefits.
Let's beat the Dumb Drum:
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