There's never a shortage of silly corporate moves. Let's look at five that may make your head spin.
1. We'll lose money on consoles, but make it up with ... uh ...
Microsoft (Nasdaq: MSFT ) and Sony (NYSE: SNE ) made waves during this week's E3 video game industry show by lowering prices on some of their flagship consoles. Most analysts believe that the two companies sell their systems at a loss, making that up gradually by collecting royalties from software developers, and through new digitally delivered initiatives.
The aggressive price cuts -- $50 by Microsoft and $100 by Sony -- may help erode the growing lead of Nintendo's (OTC BB: NTDOY.PK) Wii in the console space. Unfortunately, cash-strapped gamers are now less likely to buy as many games as they once did. To overcome their hardware losses, Microsoft and Sony will have to rely more heavily on high-margin digital sales of movies, music, and game. Great plan -- except for the wealth of free, legal digital content these days.
2. Not so cozy, Cosi
Shares of gourmet sandwich joint Cosi (Nasdaq: COSI ) soared 18% higher yesterday, after the company announced that its second-quarter comps rose by 2.2%.
Sadly, comps have never been Cosi's problem. The chain had a streak of 19 consecutive quarters of positive comps going until fall 2006. It's been more troubled by a lack of profitability, and Cosi's top-line report gives no indication that this more troubling trend -- the company's inability to post a quarterly profit since it went public six years ago -- is about to end. Investors will have to wait until next month for that news. As it stands now, the cheering is much ado about a mystery-meat sandwich.
3. Hello InBev, goodbye theme parks
A casualty of InBev's winning bid for Anheuser-Busch (NYSE: BUD ) may be the brewer's theme-park business. InBev CEO Carlos Brito said he's already looking for non-core assets to unload, and even if he didn't single out the theme parks specifically, they're a Clydesdale-sized target for cutting.
Such a move wouldn't just be nearsighted -- it'd be downright stupid. The company's Sea World and Busch Gardens parks attract millions of guests every year. You can't buy that kind of publicity. Also, keep in mind that beer is still a very brand-based business. Why do you think that Bud always has so many Super Bowl ads? A foreign buyer snapping up a sudsy draught of Americana may not sit well with some Busch drinkers, but the company's retreat from the stateside theme-park business would really drive that point home.
4. Running on empty
General Motors (NYSE: GM ) is doing something that it hasn't done in 86 years: suspending its dividend. The struggling automaker is also slashing executive payroll, shuttering factories, and eliminating health benefits to white-collar retirees over the age of 65.
That's just cold, GM. Even if those employees have other health-care alternatives, your move hardly burnishes your image. Then again, this is the same company that tried to push mammoth Hummers on consumers desperate for more fuel-efficient rides. It wouldn't be the first time that GM misread the market's reaction.
5. A real roller-coaster stock
Six Flags (NYSE: SIX ) has been a wild ride. The stock plummeted by 44% on Wednesday, only to soar 81% on Thursday. The percentage gains may seem far apart, but it really amounts to just a 2% gain over a pair of trading days.
One big block of shares was sold during the last hour of the trading day on Wednesday, likely indicating a major institution bailing on the company. Thursday's reversal was powered by CEO Mark Shapiro indicating that the company is positioned to deliver positive free cash flow this year.
Note to Shapiro: Hand this week's stock chart to a coaster engineer. It'll make a killer attraction.
Let's beat the dumb drum: