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. Nike's running on the wrong fuel
Nike (NYSE: NKE ) unveiled the Nike+ FuelBand SE this week. The $149 fitness bracelet builds on the original wristband that was introduced last year, tracking daily activity and translating the actions into its proprietary NikeFuel measuring system to encourage more active lifestyles.
The reason the upgrade is topping this week's column is because the FuelBand app is once again limited to iOS. There is no Android support, even though Android's global market share has grown from 69% to 79% over the past year.
The FuelBand SE may get style points for being able to sync wirelessly with iOS devices. And the FuelBand SE's loud new colors, including Volt, Pink Foil, and Total Crimson, scream iPhone 5c. However, outside having Apple's CEO on its board, it doesn't make sense for Nike to ignore the mobile operating system that dominates the market at a time when the wearable computing market is heating up with fitness wristbands that work on more devices.
2. Miracle on thirsty forced treat
Macy's (NYSE: M ) is joining the ranks of retailers that will open on Thanksgiving.
Shoppers and employees in particular may have to cut their Thanksgiving dinners short to be there for the 8 p.m. opening, but it may actually be preferable to waiting until the midnight opening of last year.
Macy's is doing this because everyone else is doing it. It doesn't want to open after shoppers have been exhausted at rivals opening on Thursday. However, this move doesn't pass the sniff test for two reasons.
For starters, the retailers that did open on Thursday night last year didn't exactly corner the market of holiday shoppers. Sears, Wal-Mart, and others grew their comps during the holiday quarter by 1% or less. Then we get to Macy's itself. It bragged about having its largest-volume Thanksgiving weekend ever last year.
If it's not broken, do you really need to try to fix it four hours earlier this time?
3. Holy Moly
One of the great things about being public is that you have easy access to the equity market to raise some capital. However, that also has a funny way of burning existing shareholders if you're desperate enough, as Molycorp (NASDAQOTH: MCPIQ ) was this week.
The rare-earth minerals specialist took a hit after raising at least $225 million by offering at least 45 million shares at $5 apiece. Molycorp can certainly use the money. It's way over budget on its Mountain Pass project, and analysts don't see a return of profitability until 2015.
However, you know things are dire when your stock closes at $7.10 and you're forced to give away the stock at $5. The dilution is brutal, and naturally investors sold off the stock on the news. You don't want to be around when the new buyers start dumping the stock for a quick profit.
4. Don't let the bed bugs bite
Select Comfort (NASDAQ: SCSS ) saw its shares tumble 22% on Thursday after warning that it will come up short this year.
This should be a great time for the maker of Sleep Number air-chambered mattresses. The housing market is booming, and demand for premium bedding would seem to increase with the heightened real-estate turnover.
Well, it's not happening. This is the second time this year that Select Comfort has lowered its outlook.
Adjusted earnings slipped 10% as revenue inched just 5% higher. Wall Street was braced for a larger decline in profitability. This is the fourth consecutive quarter that the travel-deals publisher beat on the bottom line. However, coming up short on the top line isn't going to cut it.
Travelzoo has 23.2 million willing recipients of its travel deals, but that's just a 4% increase over the past year. That's not enough for a company trading at a growth-stock multiple.
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