This Week's 5 Dumbest Stock Moves

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. Sigh of the Times
Poor New York Times (NYSE: NYT  ) . The prestigious newspaper publisher is in the process of wrapping up what should be its fifth consecutive year of falling revenue. Tomorrow it will kiss off CEO Janet Robinson, but not before handing her a golden parachute of severance, consulting fees, and pension benefits topping $15 million.

Now it's going to deal with resentful subscribers who feel they are overpaying for the esteemed daily's print edition.

New York Times accidentally sent out an email missive to former subscribers, offering them to come back at a 50% discount for the next 16 weeks. The media are playing up the blunder of an employee accidentally sending an email offer meant for 300 readers to 8.6 million people on its email list.

However, what happens as this news circulates back to the paper's existing circulation? You can bet that folks will be calling in to cancel if they're not offered the same price break. If they don't get the discount, they know they can just cancel the paper. They'll probably get the deal down the line.

2. Shears for Sears
Kmart and Sears were turkeys when Eddie Lampert pieced them together a few years ago, and things only continue to get worse with every passing year.

Shares of Sears Holdings (Nasdaq: SHLD  ) took a hit after the retailer posted a list of bad news this week.

  • Comps through the first two months of this telltale holiday quarter are off by a sharp 5.2%.
  • Sears Holdings will close as many as 120 of its stores. I'd call them "underperforming," but that probably can be said of all of the existing stores.
  • Lampert is tapping the company's credit line, a move that finds Standard & Poor's placing the beleaguered retailer's credit rating on review for a possible downgrade.

Sears Holdings is in a difficult situation. The company can't afford the capital improvements necessary at the store level to give it a shot at relevance and it can't shave margins any lower to win back bargain shoppers who have moved on to somewhere else.

3. Bad moon Verizon
If the screenshots and sources at Droid-Life.com are to be believed, Verizon (NYSE: VZ  ) is about to begin charging wireless customers a $2 convenience fee whenever a customer pays a monthly bill by phone or using a credit card online.

Verizon is the top dog in wireless, and its reputation is generally more solid than its rivals. Why would it kick in with additional fees? Does it just want more folks to set up their bills to be paid automatically so they don't realize how they keep writing bigger and bigger checks?

Either way, look for Verizon's reputation to take a hit at the most inopportune time, suffering another LTE outage this week.

4. Living la Vita loca
When Sony (NYSE: SNE  ) sold 320,000 units of its PS Vita in Japan during its first two days on the market, investors began to wonder if the struggling consumer electronics giant finally had a hit on its hands.

Well, not so fast.

Just 72,000 of the portable gaming units were sold in its second week. This is disastrous, and proves -- as we have known all along -- that Sony has mispriced what may be its last shot at mattering in handheld gaming.

A stateside launch early next year at the expected $250 price point is a wreck waiting to happen, especially with games fetching ransoms in the $40-$50 range. These are price points that would be challenging for stand-alone consoles, but they don't stand a chance in the portable space where $0.99 app downloads and $200 tablets are commonplace.

If Sony-friendly Japan isn't buying the PS Vita, one can only imagine how ugly things will get here.

5. Netflix says bye to 2011
Don't worry, Netflix (Nasdaq: NFLX  ) , 2011 is almost over.

The latest shoe to drop at the slammed video rental giant is that its customer satisfaction rating plunged this year, according to research firm ForeSee.

I guess this is another case where perception trumps reality. It's highly unlikely that anyone views customer service taking a hit at the former dot-com darling. DVDs are still arriving at healthy clips. Netflix's streaming catalog continues to grow. Even the heavily lampooned Qwikster fiasco never inconvenienced subscribers. Netflix abandoned the initiative before it was time to split its operations in two.

The price increase was real, though, and that will obviously influence satisfaction. However, Netflix members exclusively on streaming plans saw their rates remain the same. Folks exclusively on DVD plans actually were treated to a price cut.

Netflix can always hold out hope for a redemptive 2012, though it better be more careful about any changes it springs on its frazzled subscriber base.

If you want to track these companies to make sure that they don't make another dumb mistake soon, consider adding them to My Watchlist.

Motley Fool newsletter services have recommended buying shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (3) | Recommend This Article (8)

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  • Report this Comment On December 31, 2011, at 11:48 PM, LACEYLEE wrote:

    Nexflix sure stepped in a big heap when it tried to spin off Qwikster. That being said, we still have both streaming and DVD rentals coming to the house. It is way cheaper than what we pay for Direct TV which is a real rip; but since w edo not have access to cable, it is either Direct TV or Dish Network. Now if Netflix could only stream NBC, ABC, CBS and FOX, all would be good across the land.

  • Report this Comment On January 01, 2012, at 10:05 AM, xetn wrote:

    What is prestigious about the New York Times? It is just another has-been teetering on the edge of oblivion.

    I would have "bought" the former prestigious....

  • Report this Comment On January 01, 2012, at 7:09 PM, 48ozhalfgallons wrote:

    LACEYLEE: I certainly agree with the value of Netflix as compared to cable/satellite. When both streaming and DVD services were priced at about $11, I was more concerned about Netflix being able to remain in business. If you are unable to receive OTA stations via antennae, you should look into the Sonicview FTA receiver. Check it out on the net and welcome to the 21st century. You already have a dish. If Direct bothers to pull it when you cancel, a 30" dish is less than 100 bucks. 18" less than 50. A bit of tinkering and you're in business.

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