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. Streaks that won't come out in the wash
Dell's Streak -- a wireless gizmo that packs a 5-inch touchscreen -- is too big to be a smartphone, yet too small to be a functional tablet.
Making matters worse, Dell was late in announcing its pricing. Earlier this week, the company revealed it would sell for $299 tied to a two-year smartphone contract with AT&T
Obviously, a new gadget doesn't have to be an iPhone or iPad killer to make a dent in the booming smartphone and tablet markets. However, Streak's tweener positioning will make certain it isn't relevant in either niche.
2. Endgame at Blockbuster
After several quarters of false starts, beleaguered media renter Blockbuster is finally going national with its plan to rent video games by mail.
Some will argue that mail-based game rentals are a bad idea. Titles cost quite a bit more than DVDs. A hot game one quarter can grow stale a quarter later. However, there's no denying that if a direct-mail subscription plan can consist of just movies or video games and movies, that many families with die-hard gamers will consider the latter.
In short, this is a great way for Blockbuster to differentiate itself from Netflix
The reason that this move makes the "dumb" list is because it comes too late to save Blockbuster. The cash-strapped company isn't going to be able to afford the massive marketing campaign that this move cries out for. It also originally announced its plan to add games to its mail-based subscriptions in February -- of last year!
I'm also scratching my head about the desperate pricing. Instead of tacking on a premium for software rentals -- or allocating two DVD slots for a single game -- it's an even exchange. It's going to be hard to turn a profit that way.
3. This tree bears stupid fruit
Investors bid up shares of Learning Tree
Let's think about this for a moment. Investors are so wowed by a taxable dividend that they are willing to bid up a stock by more than what is likely to be their after-tax take? Revenue and operating profits are lower through the first nine months of fiscal 2010 compared to last year. Shouldn't Learning Tree be using its money to fuel its turnaround or snap up earnings-accretive acquisitions? Investors' cheering the balance-sheet gutting is silly.
What do these people think, money grows on learning trees?
4. Game off in China
Not every online gaming company in China is a speedster.
Giant's quest for eyeballs over paydays would be commendable if it weren't for the fact that most of its peers are making more money in this climate than they did a year ago. Given the ridiculous valuations in this sector -- with many of Giant's Chinese rivals trading for forward earnings multiples in the pre-teens -- investors really have to question why they're buying into a sluggish Giant.
5. Time to replace the batteries
The second chapter hasn't been as kind. A123 shares tumbled 18% on Wednesday, after the battery maker posted a wider loss that was actually more than the quarter's revenue. The stock is now trading below last year's IPO price.
This doesn't mean that the electric car story is toast. Despite its ups and downs, Tesla Motors
That's an easy way to run out of juice -- no matter how sexy a story you have to tell.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.