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. Dip those wings in weak sauce
Shares of Buffalo Wild Wings
The family-friendly sports-bar chain with a penchant for chicken wings flew through the recession, delivering positive unit-level sales while many of its casual-dining peers bellyached over empty tables. Those same tables have turned, apparently. Many once-sputtering chains are welcoming diners again, while comps at Buffalo-owned stores have fallen by a surprising 3.7% in April.
2. All's well that ends AOL
Some companies should check their misplaced enthusiasm at the door.
"AOL continues to make progress against our long-term objective of becoming an Internet growth company," AOL
Alas, there's really no sign of "progress" in the company's dreams of regaining its dot-com darling status.
Subscription revenue fell by 28%, which is natural, given AOL's decision several years ago to slowly euthanize its former cash cow. Online advertising was supposed to be the growth catalyst at the online giant, but it took a surprising 19% hit.
AOL is also unloading its ICQ platform. Sale proceeds and a commitment to focus aren't poor by-products of an asset purge, but let's not confuse backward steps and declining top lines with progress and growth.
3. Stupid analyst tricks
This week's bonehead analyst move goes to Credit Suisse's Wallace Cheung, who downgraded Baidu
Why would an analyst come down on a company with improving fundamentals, after it had obliterated Wall Street's profit targets in each of the three previous quarters?
Wednesday night's report was another winner out of Baidu. Revenue grew 60%. Earnings soared 165% to $2.02 a share, blowing past the pros perched at $1.50 a share. The outlook is even sweeter, with Baidu projecting its top line to grow 67% to 70% during the current quarter.
Let's revisit the company's report card over the past four quarters.
|
Fiscal Quarter |
Est. |
Actual |
|---|---|---|
|
Q2 2009 |
$1.44 |
$1.61 |
|
Q3 2009 |
$1.83 |
$2.07 |
|
Q4 2009 |
$1.69 |
$1.80 |
|
Q1 2010 |
$1.50 |
$2.02 |
Source: Yahoo! Finance, Thomson Reuters.
The stock skyrocketed on Thursday after Wednesday night's great earnings report. Valuation concerns are always valid, but they're best kept away from quarterly reports when the trend is this bullish. Keep this table handy, analysts. Refer to it when Baidu steps up to report again in three months.
4. JetBlue: It needed the money
After rattling off several profitable quarters, JetBlue
JetBlue's first-quarter deficit is a mere $0.01 a share, but it does break a string of five quarters in the black. The discount carrier is faulting weather-related cancellations and the costly implementation of a new reservation system for the shortfall, but the timing is terrible. The economy begins to show signs of life, but JetBlue goes from JetBlack to JetRed? Fuel prices have been pesky, but airlines seem to have regained their pricing power lately.
Oh well. Now I know why those complementary JetBlue corn chips are blue.
5. Comcastastrophe
Consumerist.com readers have spoken, and Comcast
Comcast can't take this lying down. The poll may have unscientifically surveyed mere thousands of readers, but these sorts of tallies sink reputations. Once a competitor begins hammering home the fact that your operating system stinks, your coverage map is incomplete, or you're considered the worst company in the country, the accrued bad mojo does have a nasty way of resonating with consumers.
Verizon
"One of the few times you'll hear us congratulate Comcast," reads its tweet. "Consumerist readers have spoken..."
Stay classy, Verizon.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.
