Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.
1. Jack be Kindle, sell out quick
Guess who is pulling up lame heading into the critical holiday selling season? Welcome back, Amazon.com
This makes it the second consecutive holiday shopping season that Amazon can't deliver on Kindle orders. Supplier problems tripped the leading e-tailer last year. The most likely explanation for the current shortage is that the rumored second-generation models will be hitting the market in a few months.
Either way, what was Amazon thinking when it got the huge promotional push by having the bookworm influential Oprah Winfrey spend an entire show in October promoting the revolutionary device? If there were supply problems or the company was ready to roll out a new and improved model, couldn't it have asked Winfrey for a rain check? If not, it should have done everything possible to either rush the second-generation model or ramp up supplies to make sure that Winfrey's praise doesn't wind up hurting Amazon by forcing book lovers to load up on e-book reading alternatives to the $359 Kindle.
2. Thumbs down on the headline
I'm a fan, subscriber, and shareholder of TiVo
It sounds good, until you realize that the company would have posted a loss if not for scoring a juicy one-time $105 million legal settlement from EchoStar
3. Stop thinking inside the box
DVD-flipping giant Blockbuster
I think this is a blunder for many reasons, but the real peculiar move is positioning the device as a freebie if you pre-order 25 movies at $3.96 apiece (or $99). What's wrong with that? Well, the company's marketing pitches digital rentals starting at just $1.99. Since when do prepay customers pay more? Sure, new releases will set you back $3.99 and the $1.99 rock-bottom price is positioned as an attractive point for subsequent rentals, but that's not good enough. It has to compete with the more flexible immediate playback of digital cable's video on demand and Netflix
4. You can't spell latte without late
Shares of Starbucks
Who are these sellers? Did they not get the memo? This is old news. The tipoff should have been the company's quarterly report two weeks earlier, wherein laying out hypothetical earnings scenarios Starbucks used negative comps of 2%, 5%, and 7% as three potential models.
Heck, even the 8% decline in same-store sales for its most recent quarter should have been a dead giveaway that the only positive thing you'll find at your local Starbucks in the near term is a friendly "good morning" from a barista.
5. Pulte my finger
On the other end of the market overreaction spectrum, shares of Pulte Homes
Silly me, I thought that it was a bad sign when a company needs to conserve cash so badly that it can't afford quarterly payouts.
Oh, I get it. Homebuilders rallied this week as a result of falling mortgage rates, the bailout-mandated loosening of the credit markets, and the flawed notion that the government will pass legislation to artificially inflate home values again. However, someone should tell Pulte all that. There's a reason why it's cutting off its yield-chasing investors.
Let's beat the dumb drum: