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 biotech shop of horrors
Now the FDA is getting involved. Genzyme may have corrected the problems, but the Food and Drug Administration wants a consent decree on the troubled plant. In other words, the regulatory agency will appoint a third party to inspect the Allston plant to make sure that it's compliant -- with Genzyme picking up the tab, dealing with any plant delays during the inspection, and potentially paying stiff penalties.
Let's hope that the FDA is quicker here than it is during its methodically slow clinical trial process.
2. Poison Aero
Unsold Pre and Pixi smartphones are collecting dust. The Nexus One hasn't been a slam dunk. Dell
This is brilliant, and by brilliant, I mean ridiculous. The Android-fueled Dell Aero will have an uphill battle if it even wants to be a niche player in this crowded market. Since carriers subsidize smartphones in exchange for two-year contracts, it's not as if Dell can really carve out a market as a low-end price leader. The popular iPhone starts at a mere $99, from the same carrier that will be introducing the Dell Aero.
How many will Dell sell? Replace the A in Aero with a Z, and you'll be getting warm.
3. Nerves of Steelcase
Office-chair specialist Steelcase
I singled out Steelcase on Monday as one of seven companies projected to post improving quarterly profits this week. Analysts figured that the corporate furniture maker would break even after posting a small deficit a year ago. But on Tuesday, the company announced an adjusted fourth-quarter loss of $0.05 a share, warning that the current period may be even worse.
I know that I'm not the only one eyeing Steelcase and its peers closely. Growing demand for new office furniture will be a fair indicator of increased hiring. Corporate America cheerleaders should be pointing their pom-poms in Steelcase's direction.
So far, so not good.
4. Subway sunrise
Another quick-service chain is getting into the cutthroat breakfast game. This time, it's Subway.
From a logistics standpoint, the move makes sense. Subway is already stocking ham, bacon, cheese, onions, and peppers. It added sausage when it began baking pizzas. Crack a few eggs, and a new line of omelet sandwiches is born.
Unfortunately, Subway may be forgetting that outside of New York City, drive-thru options are essential for rushed morning commuters. I've only been in one Subway with a drive-thru window. However, even the originator of drive-thru convenience -- Wendy's/Arby's Group's
5. Fool for the Citi
Shares of Citigroup
I don't think the gain is warranted. Ripping off the bandage slowly only means that the stock will be under subtler selling pressure for a longer period of time. This is a stock that has already popped fourfold since bottoming out under a buck 12 months ago. Between the dilution, the fattening float, and banking reform bent on making sure that no institution is "too big to fail" in the future, Citigroup bulls may not be entirely aware of what they were cheering about yesterday. Confetti can cause paper cuts.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment 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.