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. It's a Barnes burner
Barnes & Noble
The superstore chain can't ignore the Kindle, but how can it promote $9.99 digital downloads alongside pricier hardcover best sellers at its 777 stores? It has also brokered a deal to be the exclusive e-book provider for the upcoming Plastic Logic eReader device.
Again, it sounds like an incremental deal on paper, but what will Barnes & Noble do with its stores if it educates old-school bookworms on the merits of digital books? Where will the real-world advantage go? Are bookstores the next version of the CD shops and DVD-rental chains that are gradually fading away?
One can argue that it's better for Barnes & Noble to profit from its eventual death, but this move will only speed up the effect of the poison.
2. Boo-hoo, it's Yahoo!
Tuesday should have been a big day for Yahoo!
The enhancements to Yahoo.com are refreshing. Yahoo! delivered better-than-expected earnings. Unfortunately for Yahoo! shareholders, the stock opened lower the following morning.
Why? Pick your favorite reason.
- Revenue before traffic acquisition costs fell by a brutal 16% during the quarter.
- Operating profits took an even harder hit, off by 25%.
- The new homepage is a smorgasbord of customized apps and local news, but has there ever been a portal makeover that truly moved the needle? Don't cheat and answer "Bing," because that's an evolutionary upgrade, and not just a makeover.
3. The polite way to rob a Bankrate
Yes, Bankrate is having a lumpy 2009, and I can't question the company's decision to cash out at a pittance -- especially if it sees even grayer storm clouds on the horizon. However, this deal makes the "dumb" list because it ends in a buyout by Apax Partners.
Where's Yahoo! or Google
Yes, I'm calling you out again, Yahoo!
4. Intel inside? Not!
Sometimes, a bellwether rings alone. Investors bid up shares of Advanced Micro Devices
They should have waited to see whether AMD was worthy of the coattails. AMD shares took a 13% hit after posting results that pale in comparison. AMD posted flat sequential revenue growth, results that pulled the rug -- or coattails, in this case -- out from under those who were wooed by Intel's 12% sequential gain.
Intel and AMD aren't moving in lockstep. Intel has the netbook market at the moment, with its low-power Atom chips. But Intel won't win every round. AMD has some good things cooking with its Istanbul processor and 45-nanometer chips potentially tipping the scales in AMD's favor in the future. It's time for investors to realize that these two aren't joined at the hip.
In short, you should have no sympathy for those who misplay the sympathy plays.
5. So that's why they call them "bar"istas
Baristas will meet barflies at a test Starbucks
Let's be fair. This is at one of the new community-branded stores, free of any Starbucks signage. However, it is obviously still owned by the company, so we have to hold the java giant accountable.
Before you jump to the conclusion that this move is worth a shot, or that caffeine is already an addictive vice, or that Europe has let cappuccinos mingle with wine carafes for generations, consider the typical premium-coffee clientele. A creepy guy sitting in the corner, sipping a double latte, is harmless. A creepy guy sitting in the corner, cradling a glass of chardonnay or a bottle of Heineken, is not necessarily harmless.
Will baristas be ready to step in as bouncers once the inhibitions loosen up?
Let's beat the Dumb Drum:
More from The Motley Fool
Starbucks Corporation's Best Days Are Behind It. Here's Why, and What It Means for Investors
There's nothing wrong with the company per se, but these three factors are working against the stock.
1 Dividend Stock to Buy and Hold for Life
Starbucks may no longer be the growth engine it once was, but it’s still a solid choice for investors in search of a stable business with attractive dividend prospects.
Fast-Food Stocks: What to Watch in 2018
These are the factors that could determine whether some of the biggest industry players beat the market this year.