Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. Let's once again look back at five staggeringly dumb financial events from the past seven days.
1. Throwing the book at Wilmington
Buyouts are usually good news for the acquired. Investors may get cashed out earlier than they planned, but a healthy premium usually makes it worth their while.
Alas, that wasn't the case for Wilmington Trust (NYSE: WL ) shareholders. The regional banker accepted a buyout bid in stock worth $3.84 a share on Monday, a 45% discount to last week's close. Wait, what?
See, Wilmington also posted a brutal loss on Monday morning, obliterating the bank's book value. M&T Bank (NYSE: MTB ) agreed to acquire Wilmington for what is essentially its new tangible book value.
2. Sirius distortion
Shares of Sirius XM Radio (Nasdaq: SIRI ) fell more than 6% yesterday, even though the company posted blowout results and raised guidance.
Surprised? You shouldn't be. I warned that a heady run of better than 50% since the eve of its previous quarterly report made further gains unlikely, even upon good earnings.
This is the fourth consecutive quarter in which Sirius XM's stock has reversed its overall direction the day it posted earnings.
However, the real reason why Sirius XM makes this week's cut is the continuing lack of news on Howard Stern. Three months ago, the satellite radio giant targeted the third-quarter call as the deadline by which it had hoped to have an announcement ready.
No dice. Negotiations continue, now with less than two months left on Stern's original five-year deal. The value of a Stern deal at a stiff price is debatable, but the market hates uncertainty.
3. AOL goes AWOL
Investors warmed up to AOL's (NYSE: AOL ) third-quarter report this week. Bad move, investors.
Sure, net income may have blasted past market expectations, but the results were peppered with asset sales. Operating profits actually fell by 34%. Revenue dropped 26%, and that's with advertising revenue tanking harder than its ever-dwindling access business.
The stock now trades above the $25.07 price at which it closed the day after its spinoff nearly a year ago -- even though the company is smaller in just about every way.
4. Lumber from down under
Lumber Liquidators (NYSE: LL ) investors suffered a 14% blow after the hardwood-flooring specialist announced disastrous quarterly results, which it blamed largely on German enterprise software giant SAP (NYSE: SAP ) .
The retailer faulted the rocky implementation for problematic inventory levels, crummy comps, and a decrease in overall productivity.
It also can't help SAP's portfolio that Lumber Liquidators is bellyaching about the higher payroll and warehousing costs that it incurred as a need to beef up its workforce to handle the disarray.
The fireworks aren't over yet. Lumber Liquidators posted uninspiring guidance for the current quarter, though at least this time, it expects comps to climb.
Lumber Liquidators was humming along nicely until now. If I may suggest an update to that old familiar adage: If it's not broken, don't break it.
5. A large misstep for MannKind
It's easy to root for MannKind (Nasdaq: MNKD ) . The company is trying to get regulatory approval for an inhalable form of insulin. If successful, future diabetics and other insulin-deficient patients won't have to face a life of needle sticks.
Unfortunately, clearing clinical trial hurdles may not be so easy. A former employee is suing the company, alleging that executives are withholding evidence of "scientific misconduct" with regard to treatment testing.
Are the accusations legit or not? Either way, the market once again hates uncertainty.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.
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