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. Sam Walton wouldn't like this
Wal-Mart (NYSE: WMT) almost made it to this week's "smartest moves" column by waiting until several retailers announced earlier openings before making its move, but then the world's largest department store chain blew it by reporting earnings.
Yes, Wal-Mart will be opening two hours earlier on Thanksgiving night than it did last year. The 6 p.m. opening would've stirred up "Save Thanksgiving" viral chatter if Kmart hadn't stolen the venom a week earlier by announcing a 6 a.m. opening. With Kmart drumming up its 41 consecutive hours of shopping, it's hard to flame Wal-Mart for trying to wring another two hours out of what will be the shortest possible holiday-shopping season, given the late Thanksgiving.
However, then we got Wal-Mart's third-quarter results. Revenue rose a mere 1.6%, and U.S. Walmart stores suffered a 0.3% decline in comps. Ouch! Sometimes being cheap just isn't enough.
2. Moving pictures at Baidu
Baidu (NASDAQ: BIDU) had to battle accusations of facilitating music piracy a few years ago, and now similar accusations are being raised about the Chinese search leader's role in video piracy.
A consortium of video sites and content owners are trying to win nearly $50 million in damages, accusing a few Baidu applications of offering copyright videos. The allegations also claim that Baidu's flagship search engine links to sites that offer pirated video files.
The good news for Baidu shareholders is that it closed out its latest quarter with more than $7 billion in cash and equivalents. It can afford to lose financially. However, it's Baidu's reputation that's coming under fire here, and that would carry a greater price than any penalties that it may have to pay.
3. Green Mountain's soup opera
A bearish OTR Global report is painting an unflattering snapshot of Green Mountain Coffee Roasters (NASDAQ: GMCR) losing market share in Keurig K-Cups, the very category it created, to private-label providers. This isn't necessarily a surprise: Green Mountain discussed this in its most recent earnings call, expecting third-party providers to gain market share before it had a chance to wrestle it back.
OTR Global finds that Green Mountain is discounting K-Cups by offering them in larger value packs to compete, but that's not necessarily a margin breaker. Arabica coffee prices have fallen by more than half since peaking two years ago.
However, Green Mountain does get singled out this week because the OTR Global study reportedly indicates that the Campbell Soup K-Cups that were supposed to be coming out early next year have now been bumped to a summertime introduction. If so, that's pretty dumb. Are folks more likely to want warm soup during the hot summer or during the winter early next year? If they're not ready, there's no point in rushing them out to market, but Green Mountain did miss a window of opportunity here to widen the perceived value of its brewers this holiday season.
4. Death by hashtag
JPMorgan Chase (NYSE: JPM) thought it had a good idea this week. It would host a Q&A with its top deal-maker, opening up the floor on Twitter -- which it helped take public last week -- to field questions from the public. Folks were asked to use the #AskJPM hashtag to send questions for consideration.
The problem? Well, this is JPMorgan, one of the most hated "too big to fail" bankers of the financial crisis. Some of the "questions" were brutal.
I have Mortgage Fraud, Market Manipulation, Credit Card Abuse, Libor Rigging and Predatory Lending AM I DIVERSIFIED? #AskJPM— Downtown Josh Brown (@ReformedBroker) November 13, 2013
There was also this:
Is the fact that you've paid over half a billion in fines since August a source or pride, or are you embarrassed it's not higher? #AskJPM— alexis goldstein (@alexisgoldstein) November 13, 2013
There are hundreds more, but you get the point. JPMorgan forgot that social media is not for companies that are widely despised. It canceled the Q&A session on Wednesday night, and that in itself may be an even bigger fail.
5. The Cisco kid
Just when you think Cisco (NASDAQ: CSCO) has turned the corner, you find out that it's been going the wrong way the entire time.
Shares of the networking-gear giant tumbled 11% yesterday after it followed up a mixed quarterly report with a guidance bombshell. Cisco sees revenue falling 8% to 10% in the new quarter. Analysts were holding out for a 4% advance. Wow!
Cisco also expanded its buyback program, but bragging about previously authorizing up to $82 billion stock repurchases isn't going to win you style points when a lot of those buys took place at higher price points.
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