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. You can invent, but customers might vent
You just knew that TiVo
Well, it turns out that the new TiVo recorders introduced this week are somewhat snazzy. The fourth-generation boxes don't offer major advancements in storage capacity or exterior features, but an upgrade in its computing power makes it easier to run a slick user interface that seamlessly combines televised programming with digital offerings. There's even an add-on accessory remote control with a pull-out QWERTY keyboard.
This sounds good, so why is TiVo on this list? Well, the beefed-up, Flash-based interface will work only with the new machines. TiVo typically introduces features compatible with older models -- practically a necessity since it also sells lifetime subscription plans. If this is a new trend for TiVo, it's going to test owner loyalty and dry up demand for lifetime subscriptions that require upgrading to new devices to take advantage of expanded features.
2. Sirius gets bucked off
Sirius XM Radio
This doesn't mean Sirius XM will be bumped to the Pink Sheets. It plans to appeal the process and buy itself a little more time. It also has a shareholder-approved reverse split that it can turn to as a last resort.
However, Sirius makes it onto this week's list because it ran low on firepower when it needed some ammo the most. When the company waited until its stock broke above $1 to announce its fourth-quarter earnings date -- and timed it six days into what could have been a 10-day streak -- you could easily assume that Sirius XM had a good report on its hands. It would have just waited if the numbers would have disrupted the delisting streak.
However, once the market discounted all of the positives in the report and sent the shares lower, Sirius XM should have had a Plan B to jump-start the shares earlier this week. Conceding just enough to re-sign Howard Stern, vocalizing an overseas streaming plan, or rolling out any honest barrage of upbeat press releases could have probably done the trick. It just wasn't meant to be.
3. The truthiness hurts
This is a blow to both Viacom, which will forgo the ad-revenue sharing, and Hulu. Even if Viacom thinks it may be better off selling its own ads through its own site, it's nixing the discovery experience. Instead of drawing an incremental audience that finds the shows through Hulu, Viacom will rely on the hardcore fans who make it a point to go directly to the show's website. In short, Viacom faces division by subtraction.
The move also blows a hole in Hulu's own sails. The network consortium that owns the site claims that its sponsorship base is improving, but why would Viacom bolt if the going were so good? Consumers also lose, since they're back to hunting down studio content across many different sites.
4. Dumb analyst tricks
A day after Netflix
That analyst's grim thesis suggests that Netflix needs to triple its subscriber base by 2015 to justify today's price. Netflix may not seem exactly cheap at 27 times this year's projected profit, but does it really have to triple its user base in five years?
The analyst also thinks Time Warner's
5. Dishing it out
While TiVo introduced ho-hum boxes on Tuesday, its stock soared by 62% on Thursday after a U.S. appeals court found DISH Network
This is a great decision for TiVo, obviously, but it's a really dumb move for the DISH camp. What was accomplished by the satellite-television company's refusal to pay up and its decision to continue to sell slightly tweaked DVRs that still infringed on TiVo's intellectual property? All the defiance did was run up its tab and anger the public by incessantly extending the legal process.
Now TiVo's back in the driver's seat and stronger in enforcing its patents after DISH was made a willing example of in court.
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 alike, since investors can learn plenty from both. He owns shares of Netflix and TiVo 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.
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