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. Starbucks bucks vegans and lactose-intolerant coffee-sippers
Every once in a while, even a great company like Starbucks
The barista baron will stop offering members of its My Starbucks Rewards Program free syrups or soy milk substitutions on their orders. Why? Well, obviously there's money to be made in charging for flavored syrup blasts or trading milk for costlier soy milk.
However, there's already a groundswell of vegans and lactose-intolerant customers that are steaming over the move. If it was never free, that's one thing, but taking away a perk that conflicts with the dietary habits and preferences of some of its loyal customers just looks bad.
Vegans already called out Starbucks earlier this year for using crushed cochineal beetles to obtain the red coloring in some of its menu items. The java giant backed away from that practice. This latest move isn't as problematic -- and Starbucks is trying to appease customers by offering all of its loyalty card patrons quicker access to free beverages -- but the timing is terrible.
2. A Penney for your thoughts
Shares of the department store operator were trading 12% higher on Wednesday with just a half hour left of the trading day when the company revealed that the past two weeks have been rough.
Rough? This is a company that was already coming off year-over-year comp declines of 21.7% and 18.9% in the two previous quarters. The stock had initially spiked higher on Wednesday on upbeat comments for the retailer's "brand store in a store" remodeling that found some brand stores doing considerably better than J.C. Penney as a whole. Well, gee, that's pretty easy when comps are getting crushed.
J.C. Penney went on to shed most of its Wednesday gains during the last 30 minutes of the day, going on to lose another 11% of its value on Thursday.
Those free haircuts for children on Sundays through August -- which coincidentally ended just before things turned rough -- apparently were pretty important. It's still hard to bet on thrifty shoppers seeking free snips as the demographic that turns the department store operator around.
3. Misfortune cookie
This is how the Yahoo!
The dot-com pioneer finally completed the transaction that would unload a sizable chunk of its stake in China's Alibaba. However, instead of the ideas being tossed about, including a tax-advantaged asset swap or taking the proceeds to go on a shopping spree, the deal finds Yahoo! taking a tax hit before returning all but $1.3 billion of its net proceeds to shareholders in the form of a buyback.
Really? Yahoo!'s biggest problem is that organic growth has stagnated. The only logical course is to buy its way out of this rut, snapping up fast-growing dot-coms with upside. Buybacks may temporarily inflate the share price, but it won't be long before regret creeps its way back in.
4. Palm someday
We already know how badly its initial foray went after its ill-advised $1 billion acquisition of Palm. However, in order to make up for lost time, the PC giant is working on a way to cash in on the party that iOS and Android are running away with at the moment.
CEO Meg Whitman admitted this past weekend that PCs and laptops are being substituted by smartphones and tablets in some markets, and the bleak PC shipment data over the past couple of years bear that out. However, finding a way to differentiate itself won't be easy. The market already has embraced iOS at the high end and Android as the open-source choice for the masses.
Sure, HP can put out an Android phone itself or perhaps even a Windows Phone handset, but it would be behind the curve when pitted against Asian handset manufacturers already excellent at that particular art.
5. Zynga song
The social gaming leader's week started off positively. It made a small -- and reportedly cheap -- acquisition of mid-core developer A Bit Lucky. Would that be the kind of news to encourage managers and executives to stick with the company?
Not exactly. Tech blog TechCrunch reported on Wednesday that Zynga's chief security officer is the next executive to leave this summer. Are we up to nine or 10 now? Sadly, I'm talking about the number of managers that Zynga has lost this season -- and not its share price.
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