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. Don't play it again, Sam
The market initially cheered Wal-Mart's quarterly report. Revenue and earnings rose respectably. However, stateside comps actually dipped by 1.1% -- or a more modest 0.5% decline if you back out fuel sales.
"Our customers, particularly in the United States, are still concerned about their personal finances and unemployment, as well as higher fuel prices," CEO Mike Duke noted.
Duke ! Dude! You do realize that your cheap-chic rival Target
I'm not suggesting that the economy is remarkably rosier than it was a year ago, but the signs of improvement are there. Folks are trading up and out of Wal-Mart. If shoppers were generally more concerned about their personal finances, I'd go out on a limb and suggest that Wal-Mart would be doing better.
2. Hott or nott?
Shares of Hot Topic
The near-term outlook isn't any better. Hot Topic expects to post an even wider loss on negative comps for the current quarter.
I ripped into the stock last month, after Hot Topic initiated a quarterly dividend policy and declared a chunky one-time payout.
"It's just stupid for Hot Topic to begin giving away its greenery as if it were staring at a Che Guevara T-shirt for too long," I wrote at the time. "Until it can fix its comps, it should be holding on to that money for the necessary refreshes to get back on track."
Investors ignored my warning, sending the stock as high as $9.96 -- or $8.89, after backing out last month's payouts. The stock has gone on to shed 34% of its adjusted value.
3. Shrek of decency
Shrek Forever After opens today, but that didn't stop Thomas Weisel analyst Benjamin Mogil from making a gutsy call he may come to regret.
Mogil downgraded DreamWorks Animation
Maybe Mogil is a mogul, but I don't see the logic in making a feast-or-famine call just days before the telltale event.
Quite frankly, I disagree with his assessment. The film is competing against a loaded slate of family friend films coming out over the next few weeks, but the same thing could be said of the three previous releases.
The film is also receiving slightly better film-critic reviews than its predecessor did, and Shrek the Third still took in $322 million in domestic ticket sales three years ago. Multiplex prices have inched higher, and so has the acceptance of premium 3-D and IMAX
I also think the "final chapter" billing of the film will smoke out more than a few nostalgic moviegoers who enjoyed the earlier installments. I see $315 million as the floor, and definitely not the ceiling.
4. Cheating in China
The number of active paying customers shrank to 1.7 million in its latest quarter, after clocking in at 2.2 million three months earlier.
Perfect World blames the shortfall on seasonality, technical glitches, and a crackdown on cheaters. These are all good reasons, but let's call out the seasonality claim. The two other public Chinese gaming companies that had reported results through Monday didn't post sequential dips in active gamers.
These wounds appear to be self-inflicted.
5. Best Buy can use better timing
But why? This service, offering online rentals and downloads, isn't all that different from what other dot-com heavyweights have been offering for several quarters with minimal success.
I'm not docking Best Buy for its tardiness. You don't have to be the first mover to succeed, after all. Besides, jumping in late often affords the opportunity to see what works, avoid what doesn't, and get things right. No, my problem is that Best Buy is diving into a crowded pool of nearly identical services that are struggling to get noticed moving piecemeal rentals and digital copies.
If you're going to be late to the party, at least make sure you wear something different.
Which of these five moves do you think is the dumbest? Share your thoughts in the comments box below.
Best Buy and Wal-Mart Stores are Motley Fool Inside Value selections. IMAX and Perfect World are Motley Fool Rule Breakers picks. Best Buy and DreamWorks Animation are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended a bull call spread position on Best Buy. The Fool owns shares of Best Buy and Perfect World. Try any of our Foolish newsletter services free for 30 days. That wouldn't be a dumb move.
Longtime Fool contributor Rick Munarriz is a fan of dumb and smart business moves alike, since investors can learn plenty from both. He owns no shares in any of the stocks in this story and 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.