Stupidity is contagious -- even respectable companies can catch it. As we do every week, let's take a look at five dumb financial events from this past week that may make your head spin.
1. The Hamburglar made me do it
McDonald's (NYSE: MCD ) is still struggling to draw more hungry patrons. The world's largest burger chain saw year-over-year comps for restaurants open at least 14 months slide 1% for the month of May. Its international operations were positive, but it's hard to dismiss Mickey D's shortcomings on its home turf.
McDonald's is coming off three consecutive quarters of negative comps, and unless June delivers a roughly 1% uptick, we're eyeing the Big Mac daddy's fourth straight quarter of declines at the domestic store level.
It seemed as if McDonald's was starting to turn things around when it posted flat stateside comps for the month of April. It was the first month that wasn't negative since October of last year. However, once again, we find the fast-food giant slipping.
2. Small box gets smaller
Life isn't getting any easier for RadioShack (NYSE: RSH ) . The strip mall retailer of mobile products and other consumer electronics posted another disappointing quarter, with comps plunging 14%, gross margins contracting, and red ink expanding.
RadioShack's in a funk, but it makes the cut in this week's list because it seems to be in a state of denial.
"Our first quarter performance was challenged by an industrywide decline in consumer electronics and a soft mobility market which affected traffic trends throughout the quarter," its CEO is quoted as saying in its earnings release on Tuesday.
Really? We've seen several other consumer electronics and mobile specialists already report and none of them are experiencing a 14% drop in business.
"Even in this environment, we are making progress on our turnaround strategy," he also said.
Really? How is this progress or a turnaround strategy?
3. Xbox One or lost
Microsoft (NASDAQ: MSFT ) began selling a scaled-back version of its Xbox One video game console on Monday. The new system is priced at $399, a $100 price cut from its original model, but it also lacks the Kinect camera-based controller.
It's not a horrendous move in and of itself, but Microsoft still makes the cut this week because of the deceptive ad that it's running in support of the new lower price point. It stars Breaking Bad's Aaron Paul, and it highlights various features that are only possible with the Kinect controller. It then goes on to say that the the Xbox One now starts at $399, neglecting to point out that not only is the Kinect required for a lot of things in the ad but that Microsoft isn't even making that stand-alone purchase available until the fall.
4. Let go my Lego
It seems as if Amazon.com (NASDAQ: AMZN ) isn't just negotiating in public with a leading book publisher. The New York Times' Bits column is reporting -- and my own eyes are confirming -- that Amazon has taken down the pre-order option for the upcoming Blu-ray and DVD releases of The Lego Movie, 300: Rise of an Empire, and other Warner Home Video releases.
Reports indicate that the standoff is taking place as Amazon is negotiating a new contract with Warner Home Video. This follows the prolific fallout by Amazon with Hachette Book Group where it suspended pre-orders and began warning of long delays for those considering actual purchases.
Amazon's flexing its muscles, but if it begins playing hardball with media companies by holding back on books and movies, won't this backfire on the leading e-tailer itself? If it begins to scale back what it can offer quickly, it will lose its prestige as the place for shoppers to turn to for all of their media needs.
5. Join the Comcast Army
It probably seemed like a good idea on paper. Comcast (NASDAQ: CMCSK ) moved on Tuesday to turn 50,000 of its leased residential routers in Houston into a massive public Wi-Fi hotspot network. Comcast Xfinity subscribers can tap the Wi-Fi hub for connectivity at no extra cost.
Comcast's promises that it will be allocating additional bandwidth to these routers to make sure that residential customers don't suffer from the feature. We're also talking about leased modems that belong to Comcast in the first place.
However, it still feels invasive, and the fact that customers need to opt out -- instead of opting in -- isn't going to make the company any more popular. This could be a decent solution to connectivity issues, but it's not going to go over well when folks realize what's going on and either opt out of the feature or turn off their modems when they see others accessing the hotspot.
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