Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. Here’s our weekly look at five dumb financial events that may make your head spin.
1. I'll pay you $300 to go away
If American Express
Obviously the financial services giant has worked the math here. If it sees sleepy spending activity and even sleepier repayment activity, it's better to take a $300 hit now than risk losing it all in a personal bankruptcy. Let some other issuer be the stooge. However, how do you think this makes cardholders in good standing feel?
If AmEx is paying $300 to shoo bad customers away, will good customers expect to be paid even more to stay? It's a ludicrous notion, of course, but won't it make good customers feel like chumps if the bad ones are getting paid off?
2. Take this fund and shove it
The funds may have been small, with just $400 million in assets between them, but it puts E*Trade in a bad spot.
For starters, this is a taxable event. Even if few investors are likely facing capital gains, they would naturally prefer to time their own exit. E*Trade could have told investors two months earlier, to take the tax loss in 2008.
The move also gives E*Trade brokerage account holders one less reason to stick around. At a time when the company is making headway by growing its user base on the heels of its popular E*Trade Baby ads, it shouldn't be seen as scrapping services and offerings.
3. Fade to Jack Black
Why the long face and the past tense? Well, after topping bottom-line targets for 12 consecutive quarters, DreamWorks Animation finally proved mortal. It missed expectations by earning $0.58 a share in its latest quarter, and that's before we scrape away $0.12 a share in a one-time tax benefit.
The shortcoming happened despite the company releasing the summer smash Kung Fu Panda on DVD. What's black and white and red belt all over? This, sadly enough.
4. Target practice
Cheap chic is no longer chic. Target
The real shame in Target's report comes from a dip in revenue, bogged down by a 5.9% decline in same-store sales. Rival Wal-Mart
This may come as a surprise, because one would expect mainstream department store shoppers to trade down to Target before slumming it at Wal-Mart. Can it be that Target shoppers went downmarket to Wal-Mart, instead?
5. With one arm behind its back
So much for the "good hands" at Allstate
Allstate's move would have probably not made this week's list, if not for the gumption of Chubb
Let's beat the dumb drum:
Wal-Mart Stores and American Express are Motley Fool Inside Value selections. DreamWorks Animation SKG is a Motley Fool Stock Advisor pick. The Fool owns shares of American Express. 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, save for DreamWorks Animation. 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.
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