This Week's 5 Dumbest Stock Moves

These five companies got it wrong this week.

Jan 31, 2014 at 5:15PM

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. Zynga's latest zinger
Zynga (NASDAQ:ZNGA) was supposed to report quarterly results next week. When it bumped the report a week early, one had to assume that either it was being acquired by an opportunistic bottom-feeder or it had some bad news to spill.

It seems it will be the latter, even if the stock is initially moving higher on the announcement of another mobile-gaming acquisition and layoffs.

Another quarter of cascading revenue and bookings finds Zynga trying to disguise the organic deterioration in its business by shopping for growth. It's snapping up NaturalMotion, the mobile-gaming app-developer behind CSR Racing and Clumsy Ninja.

The market's liking the moves, but investors seem to have a short memory here. Zynga's been burned in the past by chasing a social gaming speedster. Eventually, players grow tired of the flavor of the week, and Zynga's left holding degrading properties. Zynga is pointing to improvement later this year, but that's not something that's easy to believe when it's accompanied by the rollout of job cuts.

2. Apple disconnects
 (NASDAQ:AAPL) posted uninspiring quarterly results on Monday afternoon.

Net income growth was flat, and revenue actually declined slightly in the Americas. The iPhone and iPad as growth drivers only saw their revenue inch 6% and 7% higher, respectively. The smartphone and tablet markets are growing faster than that, so does Apple continue to yield share as these products go mainstream or does it make a margin-squeezing play to reach a broader audience?

The market responded to Apple's disappointing iPhone sales by sending the shares sharply lower on Tuesday. Apple is back to proving that Tim Cook is the right person at the helm again.

3. Microsoft is "settling"
Like the heroine of a 1980s romantic comedy, it seems Microsoft (NASDAQ:MSFT) has been searching high and low for that someone special when he's been right there all along.

Several reports on Thursday have Satya Nadella -- Microsoft's head of cloud computing and enterprise software -- pegged as the company's next CEO. The market rallied this past summer when Steve Ballmer announced that he would be stepping down within the year once a replacement is found.

The market was probably holding out for an outsider to breathe new life into the software giant. It may turn out that Nadella is a smart choice after all -- he's certainly better than the initial internal candidate being discussed, Stephen Elop, who left Microsoft to destroy Nokia's handset business before coming back to Mr. Softy last year. However, we've been holding out for nearly half a year for a new CEO, and an internal hire isn't going to cut it. 

4. Alarming news out of ADT
(NYSE:ADT) saw its shares plunge 17% on Thursday after posting disappointing quarterly results

Coming in short of Wall Street profit targets is no great surprise. ADT has only beaten analyst estimates once over the past year. However, the miss came despite massive share buybacks over the past year that disguise the 27% plunge in net income.

Then again, could the miss actually be because of the stock repurchases? In his TheStreet column, Herb Greenberg argues that ADT should have spent more of its money marketing its services than overpaying for its inflated stock.

He has a point. Despite ADT's push into home automation, its customer base rose by less than 1% over the past year.

5. Light up the Barbie
Mattel (NASDAQ:MAT) wrapped up this volatile trading week with a bad quarter of its own. The toymaker's worldwide sales, operating profits, and adjusted earnings all declined during the holiday quarter. Mattel fell short of market expectations on both ends of the income statement.

We can blame a problematic 13% slide in sales at both Barbie and Fisher-Price. Hot Wheels also didn't help the cause, shifting into reverse for an 8% decline. American Girl sales were up, but naturally not enough to save the rest of the playthings powerhouse.

We are living in changing times, and the push for electronic playthings and digital diversions is clearly weighing on this traditional toymaker.  

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Mattel. It also owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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