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. The fine line between traders and traitors
Where have all of the discount brokerage traders gone? E*TRADE
Naturally traders will be fickle, and January's teetering share prices probably spooked investors into action. E*TRADE's larger rivals posted February dips of 15% to 18%, after ringing up January gains of 22% to 24%.
Did you catch that E*TRADE diss, though? Among the three largest publicly traded discount brokers, E*TRADE posted the weakest uptick in January but the largest sequential downtick in February.
2. Palm leaves
Things only keep getting worse for Palm
Yes, it's that bad. There's a glut of unsold Palm phones collecting dust, so carriers are holding back on new orders.
Once again, Palm's bravado has gotten the better of it. Why didn't it cash out a year ago when Palm was generating massive buzz and tech giants would have paid a hefty premium for some skin in the smartphone game? Now it's been exposed as a lower-tier player with little wiggle room to attempt another reinvention.
Live and burn.
3. Pride and visibility
GameStop
The dip in profitability and 7.9% slide in comps during GameStop's fourth quarter were dismissed in favor of the chain's outlook that calls for record profits and a 14% to 18% top-line boost.
I will cheer on a turnaround as loudly as anyone else, but I can't ignore what became of the company's 2009 guidance that GameStop delivered nearly a year ago.
|
Metric |
3/26/09 Guidance |
Reality |
|---|---|---|
|
Sales Growth |
10%-12% |
3.1% |
|
Comps |
4%-6% |
(7.9%) |
|
EPS Growth |
18%-22% |
(5.3%) |
I'll concede that the perfect storm that has ravaged the video game industry over the past year played a major part in the unreliable guidance, but it's hard to take a turnaround call seriously until it actually starts happening.
4. Mr. Softy goes to Tinseltown
Folks have been clamoring for an official smartphone app from Netflix
Well, that day may be closer than you think. Netflix unveiled the prototype of an app that does all that, but it isn't for iPhone, BlackBerry, Android, or even Palm devices. The prototype is for Microsoft's
Why is this a dumb move? Well, Netflix CEO Reed Hastings sits on Microsoft's board, so the corporate friendships may be blurring judgment on which smartphones should be prioritized.
The move also calls into question a quote that Hastings made less than two months ago during his company's fourth-quarter call.
"It's not a huge priority for us because we are so focused on the larger screen," he told analysts, when asked about iPad support. Now there's a prototype for an even smaller screen than the iPad.
5. Bang a gong, Viacom
The legal tussle between Viacom
Zahavah Levine -- YouTube Chief Counsel -- makes a mouth-watering claim in a blog entry from yesterday.
"For years, Viacom continuously and secretly uploaded its content to YouTube, even while publicly complaining about its presence there," Levine writes. "It hired no fewer than 18 different marketing agencies to upload its content to the site. It deliberately "roughed up" the videos to make them look stolen or leaked. It opened YouTube accounts using phony email addresses. It even sent employees to Kinko's to upload clips from computers that couldn't be traced to Viacom."
Levine also claims that Viacom often demanded that YouTube remove clips that it uploaded itself, only to ask the clips to be reinstated when it realized it was its own handiwork.
"Some of the very clips that Viacom is suing us over were actually uploaded by Viacom itself," Levine concludes.
These incendiary claims will play themselves out in court, but one of the two companies is going to look ridiculous by the time this is over.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.
