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. Best Sell?
Even Best Buy's
The market didn't take kindly to the news, even if it means a meaty minority stake in the battered retailer can be had on the cheap for an opportunistic buyer. They see a guy who knows the company better than anyone else running for cover at a time when the stock is trading near a multiyear low.
Schulze's loyalty was destined to be tested. He was taken down a few pegs by the board after it was revealed that he knew about former CEO Brian Dunn's inappropriate relationship with an employee and failed to tell the board of Dunn's policy violation.
The blindsided board could've handled the situation better, and now it's paying the price.
2. Tempur tantrum
Some bed bugs really do bite. Shares of Tempur-Pedic
Tempur-Pedic warned that second-quarter sales would fall by 8% with a 3% to 5% decline for the entire year. The premium bedding maker is now eyeing a profit of $2.70 a share, well short of the $3.93 a share that Wall Street was expecting before the news.
The problem here isn't that the company's foam mattresses are a fad. Folks still want cozier beds. However, traditional mattress makers have dived into the premium market, leaving more companies battling for business.
It wouldn't surprise anyone if Tempur-Pedic returns in three months to talk down its third-quarter results. Some nightmares are recurring ones.
3. Disney pulls a Dumbo move
Disney
The Los Angeles Times is reporting that Disney will now be waiting until its DVDs have been available for purchase for 28 days before making them available through Redbox and other discount disc rental outlets.
What's the point? Folks aren't really buying DVDs these days, and that goes for studios that have tacked on four- and eight-week delays. There may be some premium pay-per-view rentals in that time frame, but is it worth it? Movie buffs will just forget about the title and move on.
Adding insult to injury, Disney started doing this more than two weeks ago. It just wasn't reported because few realized that The Secret World of Arreitty was the first Disney movie to go into the 28-day penalty box. Record-setting bomb John Carter was the second Disney release under the new terms.
Ouch.
4. World of diversification craft
Bloomberg is reporting that senior Vivendi officials will be meeting to discuss unloading its 61% stake in Activision Blizzard
Vivendi -- which acquired the meaty stake as the owner of Blizzard Entertainment during the megamerger -- is picking a lousy time to move on if things go that way. Shouldn't the company have considered raising money by selling its stake when Activision Blizzard was growing nicely a few years ago? The stock is trading near historic lows.
Who's advising the Vivendi board? Best Buy's Schulze?
5. You can't spell lululemon without lemon
Shares of lululemon athletica
The fast-growing retailer trades at a high multiple, so a mixed quarter is as good as a fail.
Bulls will argue that Lululemon provided conservative guidance in its previous quarter, only to blast through those marks. However, Lululemon should know better about aiming so low that your public projections fall short of where the pros are parked.
Get smart
Don't be a dumb investor. Check out the three stocks leading a new industrial revolution in this country. Sure, it's a free report. Check it out before it's gone.
