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. Dell of the dull
Remember when Dell (Nasdaq: DELL  ) used to be killing it?

Then the "You're getting a Dell" dude got arrested.

It was pretty much all downhill from there.

Dell came out with another disappointing quarterly report on Thursday. The PC maker saw its earnings take a big hit as revenue fell 11% to $13.7 billion. No one was expected to see Dell grow its revenue in this climate, but even jaded analysts were holding out for at least $13.9 billion in revenue.

Things are bad at Dell, and the worst part is that it doesn't seem as if the company will ever be able to parlay its leadership role in desktops and laptops into the portable computing gadgetry that consumers are actually buying these days.

2. China doesn't "ad" up
Don't be fooled by Renren's (NYSE: RENN  ) latest quarter.

Revenue may have grown 47%, but there's a reason the stock opened at an all-time low.

All of the Chinese social networking website's growth came from its daily-deals and online gaming initiatives. These are niches that have been sorely disappointing in this country, and it remains to be seen how things will play out in China. As stateside investors know, these are opportunities that don't come cheap, and Renren's cost of revenues soared 190% over the past year, or four times the clip of the dot-com disappointment's top-line spurt.

Perhaps more important, online ad revenue declined by 14% despite a healthy uptick in active users.

Something's not right.

3. Don't do Windows
Microsoft (Nasdaq: MSFT  ) picked a lousy time for a corporate shakeup.

The world's largest software company has a new head of Windows after Steven Sinofsky was shown the door.

Analysts and financial journalists were stumped. Had Sinfosky overplayed his hand in a power move as some believe? It doesn't matter. In the eyes of the consumer this move comes just three weeks after the release of Windows 8. The public begins to think that the new operating system isn't doing well, and that slows the already stagnant PC sales.

Yes, this is really bad timing.

4. Blue by you
Best Buy
(NYSE: BBY  ) had high hopes for its analyst day.

The struggling consumer electronics retailer and its overpaid CEO figured that investors would eat up its 5-point "Renew Blue" turnaround plan. Well, it didn't happen.

Surely CEO Hubert Joly didn't think that investors would believe that the chain could improve operating margins as it lowers prices to compete and expands its price-matching policy. The push to more exclusive merchandise may make sense in apparel or furnishings, but it's just not going to fly in consumer electronics, where the public only flocks to certain brands.

There wasn't a lot that seemed feasible in Best Buy's turnaround plan, so investors decided to turn around -- and walk away. The stock closed lower after the presentation.

5. A sneaky little game
It's getting harder for GameStop (NYSE: GME  ) to disguise its decaying model.

The video game retailer has been able to buy gobs of stock -- $1 billion over the past three years -- to avoid disappointing analysts on the bottom line. It's easy to make earnings look good on a per-share basis when the stock count is declining, and GameStop's fully diluted share count used for its adjusted results has dropped 12% over the past year.

However, GameStop can't hide from the lackluster performance of its stores. Every single quarter this fiscal year finds the chain lowering the midpoint of its projected comps for the entire year.

Really.

 

Comps for 2012

Midpoint

Q4 2011

1% to 5%

3%

Q1 2012

(5%) to 0%

(2.5%)

Q2 2012

(2%) to (10%)

(6%)

Q3 2012

(6%) to (9%)

(7.5%)

Source: GameStop quarterly reports.

A strong November may help GameStop shake out of its rut, but we're probably too far gone for the Wii U to save the console industry -- or GameStop.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 16, 2012, at 2:04 PM, jhf678 wrote:

    What you plan for the future is more important than what you did in the past. I think Dell forecast for next year is great. Even Apple and Google did not meet Street, dude!

  • Report this Comment On November 16, 2012, at 2:39 PM, Mindphaser wrote:

    "but we're probably too far gone for the Wii U to save the console industry -- or GameStop"

    This is the funniest thing I've read all day. The console industry is cyclical.

    See you at $33.

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