This Week's 5 Dumbest Stock Moves

These five companies got it wrong this week.

Jul 18, 2014 at 5:15PM

Stupidity is contagious -- even respectable companies can catch it. As we do every week, let's look at five dumb financial events from this past week that may make your head spin.

1. It's raining pink slips
It isn't a surprise to see Microsoft (NASDAQ:MSFT) resorting to layoffs. With a new CEO and a major recent acquisition, it was really just a matter of time before the world's largest software company began to prune its payroll.

However, Microsoft makes the cut this week because it plans to eliminate 18,000 positions over the next year. A little more than two-thirds of the cuts will come from its recent mobile handset acquisition. That was expected, but 18,000 jobs -- and the pre-tax charge of as much as $1.6 billion associated with the move -- is a bit extreme. At the very least, morale will be a problem as Microsoft shrinks in scope.

2. Krash Kors
It was a rough week for Michael Kors (NYSE:KORS), with several analysts downgrading the stock or lowering their price targets. The fear here is the deep summertime discounting that they're seeing on the company's designer handbags and accessories. Kors typically has markdowns to make room for incoming fall fashions -- and one analyst bucked the negativity by arguing that the seasonal discounts are in line with Kors' action a year earlier -- but the pros are still worried.

Kors is reporting in less than three weeks, so the push by so many analysts to temper enthusiasm is troublesome. Then again, Wall Street has never done a good job of assessing how Kors is doing. Over the past four quarters we've seen Kors top analyst bottom-line expectations by 25%, 4%, 29%, and 15%, respectively. Something's got to give come Aug. 5, when Kors will report fresh financials.

3. Gone in a flash
SanDisk (NASDAQ:SNDK) shares took a hit on Thursday after the company gave a weak outlook for the current quarter. The rearview mirror looks great: The flash memory giant came through with an 11% pop in revenue as a 51% spike in volume was more than enough to offset a 26% plunge in pricing. The lower prices didn't squeeze margins too badly, with SanDisk's adjusted profit of $1.41 per share besting the $1.39 per share that analysts had laid out. 

However, SanDisk's top-line outlook for the third quarter is lower than what Wall Street had forecast. SanDisk's guidance on gross margins and forewarning that the second half of the year will be supply constrained didn't win over too many investors. The stock slumped 14% on Thursday as a result of the troublesome outlook.

4. Mattel hell
There's no time to toy around at Mattel (NASDAQ:MAT). The leading toymaker posted disappointing quarterly results on Thursday morning, weighed down by a 9% decline in worldwide sales.

There was a 15% drop in Barbie sales, but that wasn't even as bad as the 17% plunge at Fisher-Price. Yes, even the seemingly timeless Fisher-Price kids toys have fallen out of favor with today's jaded toddlers and their parents. This is now the third quarter in a row where Mattel has fallen short of Wall Street's profit expectations. Mattel needs to stop playing games -- and the country needs to start.

5. It doesn't check out if folks don't check in
RealPage (NASDAQ:RP) is one of Friday's biggest losers after offering up preliminary financial results that fell woefully short of market expectations. The provider of property management software solutions now sees revenue for the recently concluded second quarter clocking in between $93.8 million and $94.8 million, essentially flat with the prior year's results but well short of the $107.2 million that analysts were forecasting. 

RealPage blames the health of the leasing market for the shortfall as low vacancy and resident turnover rates find property owners relying less on RealPage's marketing solutions. It had to discount aggressively to gain market share at the expense of margins, and that naturally isn't going to fly with investors banking on bottom-line improvement.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Mattel and Michael Kors Holdings. The Motley Fool owns shares of Michael Kors Holdings and 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.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information