Some investors are dumber than others.
Shares of DISH Network (Nasdaq: DISH ) were bid 5% higher yesterday, despite a disappointing report out of the country's second largest satellite television provider.
Revenue and earnings missed Wall Street's targets, and DISH lost 111,000 net accounts during the quarter.
Don't blame the reliability of satellite television or the economy for the net cancellations. Larger -- and pricier -- rival DIRECTV (NYSE: DTV ) had no problem growing its base of couch potatoes during the same three months. DIRECTV has come through with more than 60 consecutive quarters of net subscriber gains.
Given DISH's problematic fundamentals, what could possibly have given the stock a lift yesterday? Well, the company declared a one-time distribution of $2 a share.
Now, before you begin wondering how you can join the lemmings in bidding DISH higher, let's explain why that would be a bigger mistake than the Indianapolis Colts passing on Andrew Luck come April.
There is no free lunch. In fact, this is worse than a paid lunch because it's a taxable event. If the stock climbs a bit higher than yesterday's buck-and-change move it will be eating into the entire value of the payout after taxes.
More important, this isn't found money for DISH or its shareholders. The stock will shortly drop by $2 a share to adjust for the dividend, and this is money that DISH could probably use.
It's clear that DISH is not going to make a dent in DIRECTV's stronghold for the high-end satellite television customers. Unfortunately, that means that it will have to become as aggressive as AT&T's (NYSE: T ) U-verse and Verizon's (NYSE: VZ ) FiOS have been on the low end.
Oh, and this isn't just about having enough dry powder to attempt to turn around its own operations. This is still a company that is going to have to invest a ton of money into Blockbuster if it wants to make the most of Netflix's (Nasdaq: NFLX ) recent stumbles. There's also that pesky nine-figure settlement for trampling all over TiVo's (Nasdaq: TIVO ) patents.
Investors cheering on this week's taxable distribution are either missing the big picture or have plans to be long gone before DISH hits the wall.
Two bucks is too high a price for fleeting happiness at DISH. You'll see.
If you want to follow this saga, track the latest news by adding DISH Network to My Watchlist.
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