The collective wisdom of the stock market is so often sadistic, giddily bidding up the stocks of companies in trouble when they cut jobs or sell poorly performing business units. Of course there's logic to such buying sprees: Painful moves such as these should boost profits long-term, which in turn should benefit investors.
Yesterday at the closing bell, the whips and chains came out at disk-drive maker Seagate Technology
The workforce reductions and other cuts will lower operating expenses by roughly $150 million, including a $50 million charge to earnings during the fourth quarter, which ends July 2. Seagate had been expected to report a profit of $0.01 per share, but now that's anything but assured.
Call me boring, but I get no pleasure from Seagate's pain, primarily because the company should be nabbing profits. Think about it. PC and server sales are spiking, with many of Seagate's largest clients reaping the rewards, including Motley Fool Stock Advisor pick Dell
Despite the macroeconomic trends, Seagate and close competitors Maxtor
And yet, masochistically, investors continue to throw money into its stock. Frankly, it's difficult to watch. Some things really should be done in private.
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Fool contributor Tim Beyers, being an old-school tech guy, hates piling on Seagate. But he also hates to see investors' returns needlessly flogged. Tim owns no shares in the companies mentioned, and you can view his Fool profile here.