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 head-spinningly dumb financial events from the past seven days.
1. A chip off the old blockbuster
Sometimes 1 + 1 doesn't equal two. The FDA has temporarily shot down plans to combine Abbott Labs'
That doesn't seem fair, does it? TriLipix and Crestor are already on the market as stand-alone drugs with the Food and Drug Administration's blessing. There's been a best-of-breed trend among pharmaceutical giants to combine winning drugs, and this mashup -- known as Certriad, if it eventually sees the light of day -- seemed like a no-brainer.
The ruling doesn't mean curtains for Certriad. The FDA's "request for additional information" may simply be delaying the inevitable. However, if gathering that information takes too long, the uncertainty surrounding the ruling could hurt TriLipix and Crestor sales by fueling lingering doubts about unhealthy combinations.
2. Wince Charming
When is a plus a minus? Ask Charming Shoppes
Charming isn't the only retailer struggling at the moment, but it makes this week's column for its misplaced relative optimism.
"Our same store sales comp only improved marginally from (13)% in the third quarter to (12)% in the fourth quarter," reads one passage in its earnings report. (In this case, the numbers in parentheses represent losses.)
"Our first quarter 2010 to-date same store sales comp through eight weeks was approximately (4)%, which while still negative, reflects improvement across all of our brands from our fourth quarter comps and progress in our Spring assortments," goes another.
Charming, do us all a favor and stop using the words "improved" and "improvement" in discussing negative comps. Regardless of the sequential trend, there is still no year-over-year improvement, despite your sandbagging.
And what's the deal with a plus-sized retailer doing so poorly these days? There's seemingly no end to our obesity epidemic, and publicly traded weight-loss specialists have been disappointments.
3. Gee, Kijiji
Despite its success in Canada, South Africa, Australia, and parts of Europe, eBay
Tuesday's launch of the Craigslist wannabe threatens eBay's brand. Does it want its iconic "eBay" name associated with free classified ads? Does it realize that the emphasis on local transactions makes its PayPal juggernaut less of a factor? Will the proximity of eBay and eBay Classifieds be confusing? Will fee-paying auction sellers migrate to the free platform instead?
I thought eBay went with the odd-sounding moniker "Kijiji" -- which is Swahili for "village" -- because it wanted to distance the new effort from its namesake marketplace.
4. Ducking out before the movie is over
These should be merry times for Cinemark Holdings
However, The Wall Street Journal and Form4Oracle are calling out the movie theater chain because a dozen insiders -- including two pre-IPO private-equity investors -- sold a combined $181.6 million worth of the stock in March.
Investors naturally get nervous when those in the know bail on a company after a big run. Executives' quest to lock in gains may be understandable, but it certainly sends the wrong message, especially when pricing trends and the popularity of premium-priced 3-D and IMAX
5. It's a fire Zale
Shares of Zale were hit this week, after the fading jeweler announced a monthlong extension on a $6 million penalty it owes Citigroup
I ripped into the Citibank-backed Zale Diamond Card three months ago. Who wants a credit card that's only good at a single high-end jeweler?
However, this also doesn't reflect well on Citigroup. The financial giant is certainly entitled to the contracted amount, but it may scare off other retailers from striking similar deals in the future.
IMAX is a Motley Fool Rule Breakers recommendation. Motley Fool Options has recommended a bull call spread position on eBay, which is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days.
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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