Last week and the week before, I took a look at five instances of companies behaving silly. Wouldn't you know it? More companies are at it again this week. Let's take a look.
1. Falling into the Gap trap
Gap (NYSE: GPS ) announced it would scale back operations. There is no shame in a tactical retreat. Retailers close underperforming stores if they can shake off bad leases, remodel concepts that need refreshing, and even relocate dud shops. Gap is doing all of that. However, it is also considering downsizing the sizes of its stores. Smaller Gaps. Smaller Old Navys. Really?
Gap is in a funk. Comps have risen in only one year on this side of the millennium. But where's the logic in shrinking the stores? I get the cost containment benefit, but how is Gap supposed to matter again with that approach? Consumers weren't finding anything worth buying when they had a ton of shelf and rack space. What makes the company think it will be able to do more with less?
2. For those about to rock
Major record labels lost another seasoned vet when AC/DC agreed to release its next CD through Wal-Mart (NYSE: WMT ) . Yes, Wal-Mart! Is your first reaction: "It's no big loss"? Those aging rockers haven't had a hit in ages. However, now that several legendary artists like Madonna and Paul McCartney have given traditional labels the heave-ho, what do you think young bands will aspire to, if getting signed by a label is more about shackles than opportunities?
I think I just remembered the last time that AC/DC had a hit single. It was about the last time that the prerecorded music industry's major labels were doing well.
3. Thinking inside the box is out of stock
The $99 home theater appliance by Roku, introduced three weeks ago to exclusively play Netflix (Nasdaq: NFLX ) PC streams through Wi-Fi-connected home theaters, is a hit. Maybe. Three weeks since its introduction, the system is now on back order. This would normally indicate strong demand, but because Netflix isn't revealing how many units have been sold, we'll call it a sign of weak supply.
Either way, with Netflix set to introduce similar functionality through a few unnamed partners that already have "millions" of TV-tethered boxes in the market before the end of the year, the Roku player may be bumping up against obsolescence before it's in stock. Go figure.
4. It's a layman problem
It's as bad as you think. Lehman Brothers (NYSE: LEH ) came clean on Monday, pre-announcing a steep quarterly loss and its plans to raise $6 billion in additional capital. Later in the week, things got even more interesting with a major executive shakeup.
Yes, this was the same Lehman that battled back rumors it was looking to raise liquidity a week earlier by resorting to a share buyback. Maybe it's just me, but one would think that a financial giant like Lehman would be better at money management and not spend money it will need later.
5. Tomb and Jerry
Yahoo! (Nasdaq: YHOO ) was in the news again yesterday, announcing that talks have concluded with Microsoft (Nasdaq: MSFT ) . Three hours later, it announced a deal with archrival Google (Nasdaq: GOOG ) , outsourcing its search engine marketing business in a deal that could bump Yahoo!'s revenue by $800 million a year.
The deal is a mixed blessing, but this is why Yahoo! makes this week's cut of dumb moves. One reason it originally rebuffed Microsoft's advances was because it wanted assurances that antitrust regulators wouldn't block the deal. Guess what? The Department of Justice now has to give the deal with Google a more strenuous sniff test. It's amazing what a little desperation can do in curing your fear of regulators.
More Foolishness:
RSS Headlines
Fool UK