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. Tiers of a clown
Oh, no! Not you too, Verizon
During an investor conference yesterday, Verizon CEO Ivan Seidenberg revealed that Verizon Wireless will likely roll out tiered data plans within four to six months.
Why would Verizon follow that road? Even if it feels that there's marketing allure to the entry-level tier, it's a trap for new smartphone owners once they realize how much surfing online they will actually do away from wi-fi hotspots. Instead of giving Verizon one more way to knock AT&T in its marketing campaigns, Verizon Wireless is becoming the enemy.
2. Canada dry
However, the reason that Netflix makes it on to this week's list is that it hired extras to overrun a Toronto media event with feigned enthusiasm. A leaked script informed the extras to get really excited if approached by members of the media for an interview. In other words, the press was had.
Netflix has a good shot in Canada, as the closest match to Netflix in the country on the DVD side -- Zip.ca -- doesn't have much of a digital strategy at the moment. However, it's certainly starting off on the wrong foot by trying to pull one over on the Canadian media.
3. Beans bubble over
Starbucks revealed on Wednesday that percolating bean prices are forcing the java-meister to raise prices on labor-intensive drinks and larger coffee beverages. What do 13-year highs in the cost of green Arabica coffee beans have to do with hustling baristas cranking out labor-intensive beverages? You got me.
Yes, Starbucks is perfectly entitled to pass on higher costs to its customers. However, given the aggressive push by McDonald's
Earnings have been growing a lot faster than revenue this fiscal year, so it's not as if Starbucks can argue that its margins are contracting as a result of pesky bean prices. Wasn't pricing itself out of the market what got into Starbucks into the mess it was in a couple of years ago?
4. Microsoft meets micro yield
Everyone is buzzing over Microsoft's
I'd be borrowing money too at 0.87% if I could, but the reason that Mr. Softy makes the cut this week is because it doesn't need the money.
Tiny interest expense tab or not, Microsoft closed out its latest quarter with $36.8 billion in cash, equivalents, and short-term investments. It doesn't need the money. It doesn't have to throw investment bankers a bone. The reason that its rate is making even government paper envious is that it has more than enough cash in its vault to back it up.
What are you doing, Microsoft? Your stock is essentially where it was five years ago, while tens of billions in the bank collect dust.
5. The sun also sets
If solar energy is heating up again, why is Evergreen Solar
More to the point, why did the low-cost silicon wafer manufacturer announce last night that CEO Richard Feldt is leaving to head up a privately held company? The only thing worse than a company in a hot sector hitting fresh lows is a bolting CEO that would probably think twice about leaving if he felt that his company was truly bottoming out.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.
Netflix and Starbucks are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended a diagonal call position on Microsoft, which is a Motley Fool Inside Value choice. The Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days.
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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.