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This Week's 5 Dumbest Stock Moves

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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 still can't spell "Microsoft" without "soft"
Every week seems to feature a new reason or two to be wary of Microsoft (NASDAQ: MSFT  ) as it heads into next week's quarterly report.

This week we got more confirmation that Windows 8 isn't the game changer that software analysts thought it would be. Industry tracker Gartner is reporting that PC shipments fell 5% during the final three months of 2012.

Windows 8 hit the market in late October, and optimistic apologists figured that sluggish PC shipments before this past quarter were the result of customers holding back on Windows 7-fueled machines in anticipation of Microsoft's update.


There's another reason to be worried about the world's largest software company. UBS analyst Brent Thill joins the growing number of Microsoft watchers cooling on the company's bold new tablet. Thill was originally modeling 2 million Surface tablets sold during the quarter, but he's slashing that in half this week to a mere million units.

Wall Street sees Microsoft's quarterly profit checking in next Thursday at $0.75 a share, short of the $0.78 a share it earned a year earlier. There's no reason to believe that it won't be even worse.

2. CBS leapfrogs Hopper
(NYSE: CBS  ) may have closed out the week on an upbeat note -- soaring 8% on Thursday after announcing that it would spin off its billboard advertising business as an income-producing REIT -- but it suffered a reputational blow earlier in the week.

The media giant took on water on Monday when CNET senior writer Greg Sandoval abruptly resigned.

"I no longer have confidence that CBS is committed to editorial independence," he tweeted.

CBS owns CNET, which last week announced that DISH Network's Hopper was disqualified from consideration for a "Best of CES" award that CNET was dishing out. Well, it turns out that CNET editors were going to award Hopper -- the ad-skipping DVR -- with the award. CBS, locked in a legal battle with DISH over the commercial-obliterating nature of Hopper, was able to persuade CNET to not go through with the award.

The legal system has yet to decide on the legality of DISH Network's revolutionary DVR, but it just looks bad when CBS meddles in a way that tarnishes CNET's credibility.

3. There's carnage in your carnitas
Chipotle Mexican Grill
(NYSE: CMG  ) got the guacamole kicked out of it after posting disappointing preliminary fourth-quarter results.

Even through revenue climbing 17% to $699.2 million is actually nicely ahead of the $690.9 million that analysts were expecting, the real pain comes on the bottom line.

Fueled primarily by a spike in food costs, Chipotle's now forecasting a profit between $1.92 and $1.97 a share. That's well short of the $2.09 a share that Wall Street was targeting, and it translates into year-over-year growth of a mere 6% to 9%. That would be fine for stodgier restaurant chains, but the burrito roller trades at a lofty 28 times forward earnings.

Yes, Chipotle's still very popular as a concept. Comparable-store sales rose 3.8% for the quarter, and Chipotle added 60 new restaurants during the final three months of the year. However, the company had already taken a hit last year after failing to pass on rising commodity costs to its customers in time. It happened again.

4. Intel outside
(NASDAQ: INTC  ) was supposed to report quarterly results after the market close yesterday.

Unfortunately, the tech bellwether sent out its earnings release to some tech reporters six minutes early.

The mistake -- this time reportedly an inadvertently itchy trigger finger at Intel -- didn't seem to make a lot of difference. The tech reporters did a good job of keeping the premature leak under wraps. Trading was volatile in the final few minutes of Intel trading, but the stock did trade higher despite the disappointing report.

As for the actual financials, Intel let investors down by posting a softer revenue forecast than the market was expecting. Then again, now that we know that Windows 8 isn't a PC industry savior, should we really be surprised that Intel is meandering as it tries to diversify its offerings into actual growth markets?

5. Facebook wants to show you something
Shares of Facebook (NASDAQ: FB  ) fell 3% on Wednesday -- on its heaviest volume in more than two months -- after introducing a search platform that screens the input of friends and friends of friends to ferret out useful results.

Graph Search will be huge, in time. For now, it doesn't help that it has such a silly name and that CEO Mark Zuckerberg argued that this could "potentially be a business" over time. Inviting media for a bar-raising product that won't be monetized right away is never a good idea.

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  • Report this Comment On January 30, 2013, at 9:41 PM, tomd728 wrote:


    Absolutely love the verbiage on CMG !

    You have always been one of those MF guys with a great sense of humor and is that sense needed with

    the nonsense that goes on with some of these equities and markets.


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9/30/2016 4:01 PM
CBS $54.74 Up +0.17 +0.31%
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Intel CAPS Rating: ****
MSFT $57.60 Up +0.20 +0.35%
Microsoft CAPS Rating: ****