Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As we do every week, let's take a look at five dumb financial events that may make your head spin.
1. The Enron of India
Deceitful debacles aren't exclusive to stateside collapses like Enron and Bernie Madoff. India's Satyam Computer Services
We're not talking about little white lies here. The balance sheet was bloated with more than $1 billion in bogus cash. In its most recent quarter, the IT outsourcing giant overstated its operating margins eightfold.
It's a crushing blow to investors, but a reminder that corporate cheaters ultimately get caught in their web of lies.
2. One thing after another
It was a bad week for Time Warner
- The company revealed that it will record a whopping $25 billion in writedowns for the recently concluded quarter.
- It warned that it will come up shy of its expectations from November, which probably isn't much of a surprise.
- A key AOL executive decided to bolt for Univision.
3. Apple sauced
What's so bad about an uninspiring Macworld? There's nothing necessarily wrong with lacking an earth-shattering kaboom at the annual expo. Some folks are actually excited about the software updates, the spiffy $2,800 MacBook Pro, and the unshackling of iTunes. Apple
However, the story makes the dumb list cut because this also coincides with the first Macworld that an ill Steve Jobs chose not to attend. Apple needs to prove to investors that it can still be exciting after Jobs retires. This was the perfect chance to wow fans sans Jobs, and the Cupertino company couldn't do it.
4. Time for another Microhoo rumor
Just when you thought that the final Microsoft
Yahoo! shares temporarily popped higher on Wednesday afternoon, after the popular TechCrunch blog posted some new buyout chatter. According to "sources with knowledge of the proposed transaction," TechCrunch is hearing that a group of Silicon Valley executives and connected investment bankers will buy Yahoo! shares in the mid-teens, financed by Microsoft's money. They will then sell Yahoo!'s search business to Microsoft, and run the rest of the company.
Microsoft and Yahoo! do belong together, but any eventual merger is unlikely to play out this way. Why would Microsoft let someone else gamble with its money? Why can't Microsoft orchestrate the deal for Yahoo!, then move the pieces it doesn't need? Now that dot-com stocks are ticking back into favor, why would Yahoo! settle for a price in the $15-to-$16 range? The appointment of a popular outsider CEO alone would probably get the stock back to those levels.
5. Someone call mall security
It has been a rough week for most retailers, full of grim news about soft holiday sales. However, Abercrombie & Fitch
Investors can only hope that the dramatic plunge in popularity is the result of the chains refusing to follow rivals with ridiculous markdowns, leaving gross margins somewhat intact. I wouldn't wait up for that, though. If folks aren't spending money at these chains during the seasonal peak of giving, it's hard to see them as leaders when the economy does bounce back.
Let's beat the dumb drum:
Microsoft is a Motley Fool Inside Value pick. American Eagle Outfitters and Apple are Motley Fool Stock Advisor picks, and Satyam is a former pick. The Fool owns shares of American Eagle Outfitters. Try any of our Foolish newsletters today, free for 30 days.
Longtime Fool contributor Rick Munarriz is a fan of dumb and smart business moves. Investors can learn plenty from both. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.