This Week's 5 Dumbest Stock Moves

Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. Let's take a look at five of this week's dumb financial events that may make your head spin.

1. As the Dell tolls
I ripped into Dell (Nasdaq: DELL  ) in this column last week, over the logic of putting out its Streak tweener. This week, there are even more ways I can target Dell.

We can start with the company's uninspiring quarterly report last night. Then we can jog earlier into the week, when a Securities and Exchange Commission filing revealed that 25% of the computer maker's shareholders voted against retaining Michael Dell on the company's board. That's not burnt coffee you're smelling in the boardroom. It's Eau de No Confidence.

However, I'm going to go in an entirely different direction. Instead of hating on Dell this week, I'm going to call out the folks suggesting that disgraced Hewlett-Packard (NYSE: HPQ  ) ex-CEO Mark Hurd replace Michael Dell.

I'm a huge fan of Hurd as a turnaround expert, but that's not what Dell needs right now. The company needs inspiration more than operation right now. It needs a voice nudging it into higher margin tech areas. Dell is crying out for someone who can actually see into the future so it's not left chasing everybody else with smartphones, netbooks, and tablets.

Hurd isn't that person. Can it be Michael Dell?

2. Kiss Intel
My initial reaction to Intel's (Nasdaq: INTC  ) shelling out $7.7 billion for McAfee (NYSE: MFE  ) wasn't meant for impressionable ears. Security software? Isn't everyone practically giving away antivirus protection these days?

I decided to give McAfee the benefit of the doubt, so I checked the financials. It's growing and analysts continue to see the software company moving in the right direction.

However, it wasn't until reading fellow Fool Anders Bylund's take on the matter that my disdain for the buyout gelled. It's not just the price -- a huge premium that values the company at price points last seen before the dot-com bubble popped. I'm now concerned about Intel's losing focus, as Anders suggests, on its bread-and-butter computer chips.

Oh, and won't this rub some of its customers the wrong way? Many hardware companies already have partnerships with leading antivirus software developers. Is there going to be a conflict of interest here at some point?

I'm not impressed, Intel.

3. Take two and call me in the mourning
Web-based vitamin retailer Vitacost.com (Nasdaq: VITC  ) came undone in nearly every way imaginable during this week's horrific quarterly report.

It posted an unexpected loss, as expenses spiraled out of control and revenue didn't grow as briskly as Wall Street was banking on. The company's CEO stepped down, and Vitacost suspended both its guidance and its plan to smoke out a potential buyer by exploring the euphemistic "strategic" alternatives.

The saddest part of this story is that Vitacost wasn't even public a year ago. It's been a stinker ever since it went public back in September.

If you're going to go public, come ready to live up to the hype. The more busted IPOs littering Wall Street, the harder it will be for even the good companies to go public.

4. There's nothing good on TV
There was plenty of buzz when Google (Nasdaq: GOOG  ) introduced its Google TV initiative. Backed by some heavy hitters in hardware, it was easy to get excited about the world's leading search engine making a play in home theater.

Unfortunately, it's having a hard time persuading media companies to play along with its revolutionary content-scouring device. The major networks are concerned about monetization, unauthorized clips, and losing control. Since media companies can block Google TV's access to their websites, one would think that Google would have nailed this down before it approached the hardware heavies.

5. Lost in translation
I'll give you a CEO quote from an earnings report this week. You tell me how you think it went.

"The second quarter results largely came in line with our expectations," said Perfect World (Nasdaq: PWRD  ) CEO Michael Chi.

Really? Revenue grew by 14%, smack-dab at the low end of earlier guidance calling for a 14% to 21% top-line spurt. Earnings of $0.55 were dramatically short of the $0.72 a share that analysts were expecting, but Perfect World doesn't provide bottom-line targets, so Wall Street struck out looking on that one.

The stock naturally got smacked down on the news, falling 4% on Tuesday. Even if Chi doesn't provide earnings guidance, it seems insulting to fall well-short of what the pros project but still call it expected.

Which of these five moves do you think is the dumbest? Share your thoughts in the comments box below.

Google and Intel are Motley Fool Inside Value recommendations. Google and Perfect World are Motley Fool Rule Breakers picks. The Fool owns shares of Google and Intel and has written puts on Intel, on which Motley Fool Options has recommended buying calls. Try any of our Foolish newsletter services, free for 30 days. That certainly wouldn't be a dumb move.

Longtime Fool contributor Rick Munarriz is a fan of dumb and smart business moves. Investors can learn plenty from both. Hdoes not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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