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 head-spinningly dumb financial events from the past seven days.
1. The Sun rises … then sets
The union would have made sense, but IBM had little reason to overpay for a struggling server giant, especially when it was the sole bidder. Sun wouldn't listen to a slightly lower offer, apparently, so IBM walked away.
Poor Sun. Aren't there enough dissections of the botched Microhoo, EA-Two, and Circuitbuster pairings to teach us that once you turn down a suitor offering a healthy premium, it's all downhill from there? I guess we can add IBMicrosystems to the casualty list.
2. Make it a Blockbuster fright
Shareholders hate to see the term "going concern" in SEC filings, since it often relates to conditions under which a particular company may have to file for bankruptcy. The term was stamped all over a part of Blockbuster's
The real nail-biter stems from the $250 million revolving credit facility that Blockbuster had secured a week earlier. The filing points out that "certain conditions set forth in the amendment" must be met before the credit is made available next month.
Blockbuster is confident that it will be able to meet the requirements, but in these days of collapsing deals and gun-shy creditors, you can't count your credit facilities until they hatch.
3. Amazon bites into the forbidden fruit
It didn't take long for Amazon.com
Some will argue that Amazon probably didn't have a say in the matter. The record labels are calling the shots, and once Apple agreed to more flexible price points, they likely wanted its rivals to follow suit. However, Amazon can't afford to simply match Apple. If it wants to nibble away at the digital music market that Apple owns, it'll have to differentiate itself.
4. Facing the Facebook facts
Facebook passed the 200-million-member mark yesterday. That's a huge milestone for the social networking site, which launched less than five years ago.
How can this be a dumb stock move? Well, let's conduct a roll call of the companies that missed their chance to purchase a piece of the company:
- One search engine supposedly offered just more than $1 billion for Facebook, got rebuffed, and walked away from the negotiating table.
- A rival search engine only wound up acquiring a 1.6% stake in Facebook. At least that company left with an ad-serving deal.
Either way, don't you think that a fast-growing site like Facebook would look good on the arm of any struggling Internet portal these days? I sure do. They blew their chances to nab Facebook before it hit the big time.
5. Fly me to your doom
Another pricing war has erupted in the travel portal space. A Merrill Lynch analyst downgraded Expedia
Moves like this may help the portals win over window-shoppers who scour the market through a portal, then book directly with the air carrier. But this strategy could also leave a dent in Orbitz's already flimsy margins.
Buckle up, investors. It's going to be a bumpy ride.
Let's beat the dumb drum:
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.