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. It's dead, Jim
Shares of priceline.com
The stock had earned its wings as a market darling through the recession, posting 16 consecutive quarters of analyst-thumping results. However, it now expects to generate an adjusted profit between $2.50 a share to $2.70 a share for the current quarter on revenue growth of 18% to 23%. Wall Street was banking on earnings of $2.83 a share on a 26% top-line spike.
It's not as if priceline has a shortage of scapegoats, as it points to volcanic ash travel interruptions and the sinking euro. These are certainly valid obstacles, but priceline traded at a premium because it routinely topped Mr. Market. It's no longer immortal.
2. Nexus One is the loneliest number
It wasn't an entirely bad week for Google, since marketing research giant NPD Group revealed that smartphones powered by Google's Android mobile operating system outsold iPhones during this year's first quarter.
However, Google has been investing time, money, and its reputation on the Nexus One phone. Android will clearly live on as a platform, but Google's fate as a hardware brand isn't looking so hot right now.
3. Word to your mother lode
Office 2010 made its corporate debut on Wednesday, weeks before Microsoft's
Clearly Microsoft is responding to the Google Apps threat, as Big G has been offering web-based word processing, spreadsheets, and presentation software for free. This is a battle that Microsoft can't win, and this has nothing to do with Microsoft's commanding market share in this space where it's clearly the victor.
No, Microsoft is going down a downward spiral where software prices will fall -- and with it Mr. Softy's profitability. It will naturally keep some of the juiciest Microsoft Word features as a premium software offering, yet that only poses the risk of Google and other cloud hoppers to deliver superior web-based word processing platforms. Microsoft may be educating its users on a universe of online apps that will make them less dependent on Microsoft's physical software.
Microsoft had to do this to remain relevant in 2010, but it really is the ultimate Catch-22.
4. Fitch or cut bait
Abercrombie & Fitch
It gets worse. Most of the compensation came in the form of stock options that will vest over time, but the balance consists of his salary, his personal use of the corporate jet, taxes owed as a result of his leisurely usage of the company jet, and personal security.
Does that jet sound familiar? This was the same CEO that was paid $4 million by his company's board last month to limit the personal usage of the jet. If your CEO is spending so much leisure time on the flying Fitch that he needs to be paid to stay grounded, I'd save those stock options as incentives for executives that are truly aligned with the best interest of shareowners.
5. Yesterday's news
This is a dumb move on two counts. For starters, Gannett traded as low as $1.85 a share 15 months ago. JPMorgan has turned aggressive after the stock has popped eightfold.
The other reason that this is a dumb move is that Gannett is still fading. Earnings have bounced back as the result of shrewd cost-cutting, but publishing, advertising, and even online revenue figures are still heading lower. Until Gannett proves that it can grow its top line, it will eventually run out of costs to cut. Key aspects of the newspaper industry -- print circulation and classifieds -- are unlikely to ever bounce back.
Even if one argues that Gannett is one of the better run print empires out there -- and it is -- JPMorgan still got its investing arms too late into this play.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.
Microsoft and Sprint Nextel are Motley Fool Inside Value selections. Google is a Motley Fool Rule Breakers recommendation. priceline.com is a Motley Fool Stock Advisor pick. 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. 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.