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 (Nasdaq: ETFC) suffered a 20% sequential decline in daily average revenue trades for the month of February, offsetting the 21% sequential uptick it delivered in January.

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 (Nasdaq: PALM). Shares of the smartphone pioneer hit fresh 52-week lows after warning that revenue for the current quarter will be less than $150 million. The forecast is less than half of what analysts were expecting.

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
(NYSE: GME) shares soared 6% yesterday after the video game retailer overcame an ugly holiday quarter by offering up heartwarming guidance.

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.


3/26/09 Guidance


Sales Growth






EPS Growth



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 (Nasdaq: NFLX) -- one that can help them not only sort through their queues but also stream online -- for nearly two years.

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 (Nasdaq: MSFT) Windows Phone 7 Series handsets.

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 (NYSE: VIA) and Google's (Nasdaq: GOOG) YouTube is about to heat up.

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.

Microsoft is a Motley Fool Inside Value recommendation. Google is a Motley Fool Rule Breakers pick. GameStop is a former Motley Fool Stock Advisor choice. Motley Fool Options has recommended a write covered calls position on GameStop. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletter services, free for 30 days. That certainly wouldn't be a dumb move.

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, except for Netflix. 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.