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. Bobbing for Bezos
In an unusual move, Amazon.com
It was a childish move. Even if Amazon reversed its decision by Sunday, the damage is now done. Amazon's credibility took a hit, and it will likely have to concede the $9.99 price point ceiling that it has tried to maintain for freshly released e-books.
Higher e-book prices may seem to be good news for Amazon. If digital books cost more, the leading online retailer's cut also grows. However, higher e-book prices will naturally kill the attractiveness of forking over $259 for a Kindle. In short, the digital book revolution may get killed before it really had a chance to take off.
2. Barn burners and Noble
Barnes & Noble
Investors bid up the stock, smelling either a full-on buyout or a little activist sizzle. Unfortunately, reality may have something else in mind.
Amazon's boneheaded move may have set the e-book revolution back, but it's probably just a detour. Instead of dedicated e-book readers, consumers will just turn to digital books through tablet devices like Apple's
There is little reason to believe that bookstores won't follow neatly in the footsteps of the CD megastores that once dotted the landscape. As book, newspaper, and magazine publishers reach out directly to their readers through digital reads, the cozy bookstores will become less relevant (at least with the most ardent bibliophiles).
3. Take this HotJobs and shove it
What would you do if you were a company with $4.5 billion in cash, but coming off yet another quarter of year-over-year revenue declines? A rational company would put its greenbacks to work, eyeing acquisitions that would jump-start its growth prospects.
Well, I guess Yahoo!
I don't get it. Yahoo! meandered away from its display advertising specialty, making the flow of subscription and classifieds revenue a welcome sight of diversification.
So what color is your parachute Yahoo! -- and don't you dare say it's purple. You're trading the growth you need for the money you don't.
4. Sometimes you have to read the label
It leaned on NPD Group research, showing that traffic at quick-service restaurants fell by 3% in the quarter that ended in November.
The implication appears to be that the country's second-largest burger chain is holding up better than its peers, but let's dig a little deeper. For starters, the NPD data is limited to the United States. Burger King actually posted a 3.3% decline in comps in the United States and Canada. The NPD data also rolls through November, and Burger King's quarter ended a month later. Early indications from chains seem to indicate that December was a good month.
Hmmm. It makes one want to dig back into the ancient "Whopper beat the Big Mac" taste test data to make sure the comparisons were fair.
5. You've got fail
In its first quarter as a new public company, AOL
Subscribers continue to bail, with paying access members falling below the 5 million mark. Yes, the mighty AOL now watches over less than a fifth the number of subscribers it commanded during its peak eight years ago.
The real zinger here is that AOL claims that ad revenue is slipping because its access subscribers -- the ones that it has all but shooed away by slashing membership perks and marketing -- are monetized better than its freeloaders.
Which of these five moves do you think is the dumbest? Share your thoughts in the comments box below.
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.
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