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. Don't overbid on optimism
Many companies will post disappointing quarterly reports this earnings season, so that alone won't draw my attention. However, when you try to sugarcoat a pathetic report, you win the top slot in this list.
"While the holiday season was tough and competitive, our overall results for 2008 were strong," CEO John Donahoe notes in the earnings release. Yes, the first half of the year was strong, but that's ancient history. It's like a football team surrendering a huge lead in the fourth quarter, losing the game, and telling the press what a great game it played.
"We will build on our strengths in 2009," Donahoe went on to say. Yet a few paragraphs later, he provided a first-quarter outlook that offered sequential dips in revenue and profitability. Full-year guidance for eBay? Not anymore. The company can only look ahead three months at a time, yet the CEO is willing to reach all the way back through several quarters to pat his own company's back.
2. Penny hard away
What's the point in incurring all of the payout fulfillment costs for the token penny disbursements? Is it so the company can look back in a few years -- if it makes it out of this mess alive -- and point to years or decades of uninterrupted dividends? Is it to appease the institutional investors who run income funds that require yields in their holdings?
I've got a news flash for you, Citi. You've shed nearly 90% of your value from your 52-week high. Conservative funds and investors aren't the ones holding you right now. Keep the change.
3. Uh-Oh-pra Winfrey
The Register sunk its claws into talk show superstar Oprah Winfrey's endorsement of Amazon.com's
Is that a shot at Winfrey? At Amazon? Probably both. The Kindle has been out of stock since November, with Amazon expecting no new shipments for another five to seven weeks. This only helps to highlight the crummy timing of Winfrey's on-air endorsement of the Kindle in late October, just weeks before the three-month outage began. That's all on Amazon, though. It should have known better than to send CEO Jeff Bezos over to promote a product it was running low on, and possibly even phasing out.
4. Press Gutenberg
Google would buy up ad space on dozens of daily papers, and then resell smaller slots to advertisers. Sure, this is an old school business, but it helped associate Google as a "one stop shop" for their advertising needs. If you have to place all of your eggs in one basket, paid search is a great-looking basket, but why shutter a logical extension like print advertising? Even rival Yahoo!
5. Between a rock and a hard drive
It hasn't been a good month for Seagate
The company is also battling negative online criticism over its allegedly buggy high-capacity Barracuda drives. Having your quality questioned is never fun, but it also comes at a time when consumers are turning to lighter -- and let's face it, more portable and less problematic -- flash memory solutions. Seagate and its hard-drive cronies once ruled a data-starved world. Now they're just living on SanDisk's
Let's beat the dumb drum:
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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.