Stupidity is contagious. It gets us all from time to time -- even respectable companies. So, just as I do every week, let's look at five dumb financial events this week that may make your head spin.
1. I think Zicam
What's that smell? Shares of Matrixx Initiatives
This is the kind of hit that would sting even the largest of pharmaceutical giants. Obviously, it can be catastrophic for a small fry like Matrixx, as it braces for legal action after the recall.
2. There's a lot more space in MySpace these days
The inevitable happened. According to the traffic-tracking mavens at comScore, Facebook has now passed MySpace in popularity. Facebook added 2.8 million unique visitors in May, to close out the month with nearly 70.3 million users. News Corp.'s
If you still can't separate the bleeder from the leader, look for the pink slips. Shortly after comScore's report, MySpace announced that it will eliminate nearly 30% of its employees. What will the dismissed MySpace-ians do? Will they try to network for a new gig through LinkedIn? Will they try to reconnect with old classmates on Facebook? One thing's for sure: They're unlikely to be on MySpace.
We can't throw in the towel on MySpace just yet, though. A springtime shakeup at the top begs for a little patience to see what fresh minds can do with a tiring property. However, a few more months of defections, and you may as well write off the site's relevance.
You have to pity News Corp. The company could probably have unloaded MySpace for a pretty penny to a hungry Web portal a year or two ago. Now it's being sent to the clearance rack out back to make room for cooler Web 2.0 destinations such as Facebook and Twitter.
3. Turning a Buffett feast into a Buffett buffet
The Chicago Board Options Exchange is turning investors into speculators, having launched Berkshire Hathaway
The CBOE doesn't have to have Berkshire Hathaway's blessing, but this move is just ridiculous. Now, I realize that Berkshire Hathaway has dabbled in derivatives. Options can also be used to reduce risk, as we see with a strategy of covered calls. But who are we kidding? Most of the dabblers in these new options are likely to be speculators looking to score short-term gains on the market's volatility.
I'm sorry you had to see this, Buffett.
Sirius XM Radio
Really? No Howard Stern? That's an odd move for a music-content offering that's already taking a major gamble by charging listeners in a realm of free, ad-supported App Store offerings.
Stern has just 18 months left on his five-year contract with Sirius XM, so the satellite-radio operator has to hope it can square away the details while negotiating a contract extension. However, Sirius XM really blew it by not having its biggest attraction on board in its highly anticipated app.
5. Putting the "buy" in Baidu
You know that kid who has seen Star Trek or Twilight a dozen times? That may be Goldman Sachs. The company raised its near-term price target on Baidu
Upgrades rarely make it to this weekly "dumb" list, but this nod is going out to Goldman Sachs. Just two weeks ago, it upped the price target from $273 to $300.
The fundamentals haven't improved substantially for Baidu over the past 10 trading days. Analysts may want to revisit the usage of setting price targets if "near-term" becomes biweekly. Wouldn't it have just been easier to raise the target from $273 to $350 two weeks ago?
Let's beat the Dumb Drum:
Baidu is a Motley Fool Rule Breakers selection. Apple and Berkshire Hathaway are Motley Fool Stock Advisor picks. Berkshire Hathaway is a Motley Fool Inside Value recommendation. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days.
Longtime Fool contributor Rick Munarriz is a fan of dumb and smart business moves alike. Investors can learn plenty from both. He owns no shares in any of the stocks in this story and 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.