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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. Bickering about Ebix
Shares of Ebix (NASDAQ: EBIX  ) tumbled nearly 27% yesterday after the worrywarts at Gotham City Research accused the insurance software provider of funky accounting.

The research firm admits that it stands to profit if the stock declines, but that doesn't necessarily invalidate the accusations.

Would you discredit a bull's opinions if they were backed by an ownership stake? Of course not.

Ebix has been here before. Copperfield Research accused the software company of cooking its books two years ago. Ebix must not have done a convincing enough job of defending itself if someone else is back to taking its accounting practices to task.

2. Playing both sides of the BlackBerry
There doesn't seem to be much of a consensus on the early success that BlackBerry (NASDAQ: BBRY  ) is having with the overseas launch of its new smartphone running on BlackBerry 10.

Pacific Crest analyst James Faucette finds his channel checks indicating that Z10 shipments will come in between 275,000 to 325,000 phones during the current quarter. He's reiterating his underperform rating, fearing that Z10 sales will come at the expense of cannibalizing the company's older phones.

Canaccord Genuity analyst Mike Walkley, who was initially expecting BlackBerry to clear 1.4 million Z10 units this quarter, also whittled down his target to just 300,000.

On the other end of the spectrum, Jefferies & Co. analyst Peter Misek feels that sales have been holding up well. His estimate stands at 500,000 Z10 phones during the quarter.

Analysts often have diverging opinions, but one camp is going to look awfully silly when BlackBerry does report its quarterly results in a few weeks.

3. Office space
The combination of OfficeMax and Office Depot (NASDAQ: ODP  ) is brilliant. It helps two struggling companies team up, shave overhead, and last a little longer than either office supply superstore chain would on its own.

However, it's impossible to ignore the boneheaded way that the news was inadvertently leaked.

News of the long-rumored combination was buried in Office Depot's earnings release that went out on Wednesday morning. Office Depot had to embarrassingly retract the press release and the two companies issued an official merger announcement more than two hours later.

Thomson Reuters accepts responsibility for sending out the release prematurely. Unfortunately, there's no vat of Liquid Paper big enough to erase the memory of this blunder.

4. The wrong way to roll out video ads
(NASDAQ: FB  ) is working on a video advertising product, but it better not be too intrusive.

David Fischer -- Facebook's VP of marketing -- gave a recent presentation in which he didn't exactly shoot down the possibility of auto-play ads. These are the video spots that start playing the moment that someone loads up a website.

"Could Facebook run auto-play video ads without overly distracting users from their friends' content?" he was asked.

He didn't shoot it down:

I believe there are ways we could do it. There are ways that could be destructive and distracting to the user experience. But there are ways that could potentially balance user experience with advertiser experience. We haven't put a product out yet because we haven't had one we're comfortable with. But if we could, then we would do it.

Sure, it seems as if Fischer realizes that auto-play ads as they are commonly presented now would be disastrous. However, even considering it can be dangerous. Facebook users have forgiven the never-ending site redesigns, but they would be hard-pressed to come back to Facebook if it starts firing multimedia ads at them when they're used to silent and uncluttered newsfeeds.

5. Game of thorns
Sony (NYSE: SNE  ) held a media event to introduce its new video game console.

However, there was no console to show. During the entire two-hour presentation, Sony failed to actually show what the console -- which will roll out later this year -- actually looks like. It also failed to reveal the price tag.

Sony's last console was priced too high, and given the past three years of slumping video game sales and Sony's slipping market share, one would think that Sony would want that information out there if it's serious about winning back the gaming community.

Yes, Sony did put out the specs. The features are great, though the shift to new architecture means that older games on disc won't be playable on the PS4. Sony has a cloud-based workaround, but it's going to be hard to convince early adopters to shell out big bucks for a brand-new platform given Sony's recent shortcomings.

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Read/Post Comments (7) | Recommend This Article (6)

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 February 22, 2013, at 11:13 AM, prginww wrote:

    Asking EBIX to defend itself against allegations of accounting irregularities is like asking a bystander watching a building burn to prove they didn't set the fire. You can't prove a negative. Individuals who think there's something wrong have to prove there is something wrong. Prove to me that you didn't drive home from work drunk yesterday. Does that make any sense?

  • Report this Comment On February 22, 2013, at 1:00 PM, prginww wrote:

    I disagree that FB users have forgiven them for anything. Even though they are still using the service, I think that people are very leery of them and their motives.

    FB is making mistake after mistake. Its share price is gradually drifiting downward to under $20 where it belongs until they get a management team that is mature and better understands the psyche of the mass market.

  • Report this Comment On February 22, 2013, at 1:25 PM, prginww wrote:

    At some point EBIX must do a better job of defending itsself. This is a terrible blunder. I have been supporting EBIX for years now. However, over these years they have become less transparent not more. As to your column and to EBIX's credit Gotham and Copperfield may be 1 and the same group. The allegations also sound very much like the same plaintiffs in current lawsuits w Ebix as well. Gotham is staying secretive about who they are and it seems quite dubious or rather, I am a skeptic that they are a new research team. However, their evidence is quite damning.

    How long till a wells notice is reported? Will a wells notice come? These are the nextbig questions. None the less, EBIX is no longer a bystander watching a fire. They are a camel with their head in the sand. Time for transparency. EBIX used to break down their revenues by geography but no longer do. EBIX does not attempt organic growth estimates they no longer do. EBIX has never given guidance besides vague goals. EBIX has not explained the loan. EBIX acquired a company in Brazil 2 years ago yet we know nothing of the accretive value so far. Actually we know nothing of their acquisitions and because of this there are two law suits currently for this reason.

    Chineese frauds also had different books for tax purposes in China and the U.S. EBIX has different books in India, Australia and the US. Blind followers need to stop analyse and then conclude. I still have a thumbs up. None the less, I have serious doubts and managements head in the sand is ridiculous.

  • Report this Comment On February 22, 2013, at 1:31 PM, prginww wrote:

    Ebix, Inc. today issued a response to the Report appearing in the Seeking Alpha blog yesterday. In a statement, the Company said --

    The Company has reviewed the unsubstantiated report released on February 21, 2013. Management believes that to the best of its knowledge Ebix's financial reporting, including, among other things, the Company's accounting for and reporting of intercompany loans, is appropriate and complies with all SEC reporting requirements.

  • Report this Comment On February 22, 2013, at 2:04 PM, prginww wrote:

    Here's some other analyst who talks of blackberry as if it's the plague, and mentions "cannibalizing" again, guess he read that other talking head's script and decided that's a good verb. Folks, here's the facts: Peeps have $9 billion of unused phones sitting in drawers at home, and every time Apple comes out with a new version the media shows peeps standing in line and they all seem to already have an iPhone in their hands, but they've been told by talking heads that the NEW Apple is better so go get one, just don't expect Maps to work and be aware that there's a serious bug that can cannibalize your network, that comes straight from Apple who issued the warning this week. Blackberrys are even being sold yet in the U.S., the last I saw was a March 1st availibility, that's on a Friday by the way so I'm certain they'll be a few peeps knocking off early to get one. I prefer the Q10 cuz I'm old school and like a keyboard, but I think the Z10 will be available first. Blackberry is a Canadian company and sells phones all over the world, and who's to say that those peeps who have all those old phones sitting in drawers aren't going to finally turn them in and get a new Z10 or Q10? Repeat: It isn't even being sold here yet. I think the stock is a screaming buy at this level, are you going to double your money with BBRY or AAPL at this level?

  • Report this Comment On February 22, 2013, at 2:48 PM, prginww wrote:

    LOL of course EBIX said that. Did u expect "Yeah were guilty. My bad. Thinking jail time sounds good and oh send us a bill for fines!" Its not what they said that is concerning. What EBIX didn't say is the concern. Who got the loan? What is the purpose of the loan? Was it inter company or not? Oh yeah we have three different books because of....

    Disclosure is the key. Upon reflection I know less about EBIX because of EBIX now then I did two years ago. I can make a case that the loan was actually bribe to a government official. Prove me wrong. No why you can't nor can I prove myself wrong. Because EBIX won't tell you anything and they are the only one's who know!

  • Report this Comment On March 01, 2013, at 6:26 PM, prginww wrote:

    Aaron Rogers, I'm with you that I expect far more from EBIX as far as creating a public profile that is not so susceptible to such attacks.

    In my view the Gotham report' guts were disgorged by the Craig-Hallum Call on 2/25/13 with EBIX's CEO.

    He very clearly rebutted the major Gotham City claims; it's a very worthwhile 35 minutes to hear, but even that could have been more streamlined, direct and could have covered even more. It also could have been more easily accessible and then filed with the SEC as an 8-K transcript; that would be even a step further in access and credibility.

    Amazing that there has been no media, blog or even TMF coverage of the call and its dispatch of the silly allegations. Rick will you write something??

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