This Week's 5 Dumbest Stock Moves

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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 head-spinningly dumb financial events from the past seven days.

1. That's some smoking hot coffee
I like Peet's (Nasdaq: PEET) acquisition of Diedrich Coffee (Nasdaq: DDRX) in theory. Peet's is paying $26 a share in cash and stock for the company behind Coffee People, Gloria Jean's, and other brands of premium java.

After unloading its retail coffee shops this year, Diedrich is a pure play on the fast-growing Keurig K-Cup portion packs. Peet's is savvy enough to realize that the single-cup brewing market is the place to be.

However, this deal makes the dumb list for one simple reason: Peet's took too darn long to figure it out.

Shares of Diedrich bottomed out at a mere $0.21 back in March. That's not even a respectable tip for a cup of coffee! I don't expect Peet's to nail the bottom, but it's buying a stock that is skyrocketing 12,281% to hit that $26 price. Do you think Peet's could have at least caught it somewhere in the middle?

If the buyout proves to be a dud, everyone will criticize Peet's for overpaying as a procrastination penalty. If the Diedrich purchase pans out, investors will still have a legitimate beef because it could have come in a lot earlier -- and lower.

Peet's is in a lose-lose situation here.

2. Runaway on the runway
eBay (Nasdaq: EBAY) wants to be cool, so it's launching an online fashion magazine. There is nothing inherently wrong with The Inside Source. The problem is with eBay. Have you ever seen a flea market with a velvet rope and a bouncer? Exactly. This a lot like Mickey D's serving up angus beef burgers. It wants to be posh, but folks are just there for the fries.

The eBay connection begins to fall apart when folks click on the most-searched fashion terms. Clicking on Coach offers up links to expiring handbag auctions, but also life coach books, Cinderella coach pins, and even entire seasons of the Coach sitcom on DVD.

3. Putting the "soft" in Microsoft
At least five major public companies announced layoffs this week. This is troublesome because many indicators point toward a recessionary end. If the economy has bottomed out, why is it still raining pink slips?

The one that stumps me here is Microsoft (Nasdaq: MSFT). The Windows watcher axed 800 employees this week. Even if this is part of the 5,000 terminations that Mr. Softy originally revealed back in January, a lot has happened at the world's largest software company since then:

• Windows 7 hit the market last month.
• May's launch of Bing was an undisputed success.
• Yahoo! agreed to outsource its paid-search and engine technology through Microsoft.

Oh, and the economy and consumer confidence are holding up a lot better than they were during January's bleakness. Maybe -- just maybe -- a reprieve is in order on some of these job cuts.

4. But this is the best buy
I have a simple rule of thumb for companies entering a new market: If you have to throw elbows just to get in the door, it's probably too crowded. Best Buy (NYSE: BBY) is teaming up with Sonic Solutions (Nasdaq: SNIC) to offer online movie rentals and purchases.

Now take a step back and survey the field. The country's most popular online retailer, portable media player maker, and DVD rental chain are already well-entrenched in this market, and none of them are having any kind of success to write home about.

This is a cutthroat market with an abundance of suppliers. How about demand? When's the last time you paid for a digital movie rental? Do you know anyone who owns a legally purchased online copy of Land of the Lost? Me neither. The supply is there, but not the demand.

Best Buy may feel that it can differentiate itself through in-store promotions and hands-on education, but there's little reason to believe that Best Buy will fare any better with digital video than it has with digital audio.

5. No Doubt about it
You can't please everybody, Activision Blizzard (Nasdaq: ATVI).

The country's leading video game company posted disappointing quarterly results last night, but it's also coming up short in the eyes of Gwen Stefani and the rest of her No Doubt bandmates.

The pop rockers are suing Activision Blizzard for the way they can be depicted on Band Hero -- the latest installment in the Guitar Hero franchise that hit the market this week. No Doubt agreed to submit their likenesses for avatars and perform three songs, but the game's Character Manipulation Tool lets gamers use the characters in other songs.

This may not seem like too big a deal … until you see Stefani's avatar singing about picking up female prostitutes, or the band's male bassist belting out the band's "Just a Girl" breakthrough single.

Is Activision Blizzard in the right? It doesn't matter at this point. If it's wrong, it will pay financially. If it's legally in the right, this move will make it that much harder for the developer to land marquee artists on future releases.

Call of Duty, don't fail me now!

Let's beat the dumb drum:

• Last week's empty heads.
• The previous week's boneheaded moves.
• Last year's silliest CEO quotes.