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. Nokia sets the Finnish line for tablets
Nokia (NYSE: NOK ) arrived unfashionably late to the tablet market on Tuesday, introducing the Nokia Lumia 2520. Unveiling a new tablet on the same day that new iPads are being announced is rarely a good idea, but that's not why Nokia kicks off this week's list of dumb stock moves.
The specs are reasonably impressive for the tablet, but the $499 price point is a death warrant. Can you name a single tablet that has sold remarkably well priced as high as an entry-level iPad? The Lumia 2520 does have LTE connectivity -- something that the iPad charges another $130 for -- but the point remains that tablet makers have failed to be a hit with the masses at high price points.
Then comes the real reason why the Lumia 2520 is toast: Windows RT. Yes, Microsoft is paying more than $7 billion for Nokia's devices and services business. Nokia will be a slave to all things Windows for better or (likely) worse. But putting out a $499 Windows RT tablet on the same day that Microsoft begins selling its own Windows RT tablet -- Surface 2 -- for less is lunacy. Windows RT itself as a tablet language seemed doomed after Mr. Softy took a $900 million inventory charge earlier this year.
Nokia could've gone with the slightly more marketable Windows 8, even if the requirements would've jacked up the price even higher. Nokia also could've gone with a different name, as consumers associate Lumia with an entirely different product category running a different operating system.
2. Sirius disappointment
Sirius XM Radio (NASDAQ: SIRI ) hit a six-year high on Wednesday, but that was forgotten on Thursday after the satellite radio giant posted disappointing quarterly results. Revenue came in a bit light, but the real shocker was Sirius XM's guidance calling for just $4 billion in revenue come 2014. Wall Street was banking on $4.18 billion.
Sirius XM's official outlooks are historically conservative, giving the company leeway to boost later. But the uninspiring initial outlook comes just as the media giant is juicing up its subscription rates. The core basic rate is climbing 3.5% to $14.99 a month in January. It will be Sirius XM's first increase in two years. With the new rate, calling for a mere 6% increase in revenue next year seems even more disappointing.
3. Wii don't care
The defining console of the last generation of systems is all but going away. Nintendo (NASDAQOTH: NTDOY ) has moved to end production of the Wii system for the Japanese market. It will continue to make it in smaller numbers for the rest of the world, but if Japan has cooled on the Wii it's a safe bet that the rest of the world will follow.
Nintendo introduced the heir apparent to the Wii last November, but initial sales of the Wii U were well below the gaming pioneer's original projections. Sales did spike higher last month after a long overdue price cut, but it will be no match for when the Xbox One and PS4 roll out next month.
Nintendo is giving up on the Wii too soon. The Wii U doesn't have a large enough user base to get developers excited, and now they don't have much of a reason to support a system that Nintendo is moving on from in its own home market. This seems like a desperate move, and one that may signal Nintendo's exit from the console market to focus solely on its more successful handheld lines and software.
4. Angie's buying a stairway to heaven
It's not easy running a premium referral service for local providers these days. Angie's List (NASDAQ: ANGI ) took a hit after posting quarterly results that fell short of expectations on both ends of the income statement. Angie's List's top-line guidance for the new quarter also came below expectations.
Is anyone really surprised? We live in a world where Yelp and Facebook offer local leads for free. As good as the vetted reviews on Angie's List may be, it's hard to justify paying for the platform. Investors should've seen this coming earlier this month when it began testing a $10 annual membership in key markets. That's a 75% discount to its usual rate, and that move was enough to land Angie's List a spot in this weekly column three weeks ago.
"Angie's List is changing, and investors may not like the outcome," I concluded. You don't offer up these dramatic markdowns if business is going well.
5. The small box is a coffin
Investors cheered earlier in the week when RadioShack (NASDAQOTH: RSHCQ ) was able to square away an $835 million loan, but a day later the stock gave back all of those gains -- and then some -- when we learned why investors and RadioShack's creditors may not get the last laugh.
The small-box retailer posted another dreadful quarter. Revenue fell 10% -- weighed down by an 8% slide in comps -- and that was with aggressive discounting to move inventory. Naturally this translates into obliterated gross margins.
RadioShack's CEO is eyeing a massive makeover, and while he's quick to point out the initial success at the concept stores, there are so many factors that get in the way of judging a turnaround on a tweaked concept.
When was the last time you walked into a RadioShack? It's an honest question. What would it take to get you to walk into RadioShack again? That's another honest question.
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