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. You can't spell "Microsoft" without "soft"
Last year's holiday quarter was supposed to be the last big chance for desktops and laptops to storm back into favor.

Microsoft's (NASDAQ: MSFT  ) Windows 8 hit the market in October, and shoppers were supposed to embrace the new touch-centric operating system by replacing their older computing devices.

Well, that doesn't seem to have happened.

Industry tracker IDC reported on Thursday that PC sales fell by 6.4% during the fourth quarter, far worse than even worrywarts were predicting. Yes, even with Windows 8 widely available, folks were buying fewer PCs this holiday quarter than they were a year ago.

This is bad news for Microsoft, as it means that iOS and Android continue to lead the charge in the way folks are satisfying basic computing needs.

When you pair up slow PC sales with the recent wave of analysts lowering their fourth-quarter targets on Surface tablets, this is shaping up to be a disappointing quarter for Mr. Softy.

2. Game over
Another industry that is shrinking in scope is the traditional video game market.

NPD Group is out with its monthly overview of physical retail sales in the gaming sector, and it isn't pretty. Software sales tumbled 26% in December compared to the prior year's final month, and hardware sales plunged 22% despite the arrival of the ballyhooed Wii U system in November.

Then again, investors probably didn't have to wait for Thursday night's NPD data to arrive at the conclusion that die-hard gamers are shrinking in number.

GameStop (NYSE: GME  ) crushed that dream earlier in the week when it hosed down its performance during the nine-week holiday shopping period.

Then again, why wait until GameStop to speak to fear the worst? All that GameStop has done over the past year is lower its outlook for store-level sales at every possible interval.

Really.

 

Comps for 2012

Midpoint

Q4 2011

1% to 5%

3%

Q1 2012

(5%) to 0%

(2.5%)

Q2 2012

(10%) to (2%)

(6%)

Q3 2012

(9%) to (6%)

(7.5%)

Today

(9%) to (7.5%)

(8.25%)

Source: GameStop quarterly reports.

In other words, over the past year, the midpoint of GameStop's guidance for the fiscal year that ends later this month has gone from a positive 3% to a negative 8.25%, talked down every step of the way.

Good luck to investors buying into any GameStop rallies under the false hope that this leopard will change its spotty recent trend.

3. Hey, virtual teacher -- leave those kids alone
It isn't a surprise to see Windows and traditional video games fading, but the recent demise of online education is still a bit of a shocker.

A few years ago, for-profit post-secondary educators with virtual classrooms were one of the market's few darlings during the early recessionary stages. Displaced workers were turning to cyberspace to beef up their career skills, and Apollo Group (NASDAQ: APOL  ) was leading the way higher.

Well, crummy student loan repayment rates and aggressive marketing practices by Apollo's University of Phoenix sent Apollo and its peers to the back of the class.

The news only gets worse. Shares of Apollo flunked out this week after the company reported a 15% decline in new-student signups. Enrollment has fallen for the third quarter in a row. As a result of the emptier virtual classrooms, Apollo is now lowering its outlook for 2013.

Who's wearing the dunce cap now?

4. Goodbye, Ruby Tuesday
The shakeout in casual dining continues with the weaker players being sent to the kids' table.

Ruby Tuesday (NYSE: RT  ) slipped after posting a wider quarterly loss than analysts were forecasting.

As a result of the waning popularity of its namesake chain and other smaller concepts, Ruby Tuesday will close as many as two dozen more restaurants.

Diners are fickle, and for every chain on the rise there's another one on the way out. Now would be a good time to fire up that Rolling Stones song that bears the company's name.

5. Rare earth, indeed
Shares of Molycorp (NYSE: MCP  ) suffered a 23% haircut on Thursday after the rare-earth elements provider slashed its near-term outlook.

Molycorp will now come up short in 2013 on production delays at its revamped Mountain Pass mine in California. Could this be why its CEO stunned investors by abruptly stepping down last month?

There is definitely long-term potential for rare-earth elements in general and Molycorp in particular, but the disappointments have to stop coming.

Make a smart move instead
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