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. Video killed the networking star
Did you ever get a feeling that a product was going to be a dud before it even launched?
How can Cisco fail on both ends of its pricing strategy? The $600 price point is ridiculously high for the consumer market, and the monthly premium for unlimited calls, video messaging, and storage is just silly compared to the growing number of free video chat platforms available.
I'd also rip into the insane name, but I guess Cisco didn't check with "u" or "mi" on this one.
2. Go with the FLO
Qualcomm is ceasing the sale and activation of the portable viewers, though it plans to continue to maintain the service -- at least for now -- through wireless carriers for smartphone owners.
Qualcomm is trying to smoke out a buyer for the cash-slurping endeavor, but if it couldn't hand it off when it was still broadly available, it's hard to imagine who would step in now.
3. Hard times for Mr. Softy
Being bearish on Microsoft
I haven't been kind to Microsoft, either. I'm not upbeat on the company's near-term introductions. It's too far behind to matter when Windows Phone 7 is revealed next week. Next month's motion-based Kinect controller for the Xbox is three years too late to matter.
Over the longer haul, I just don't see how Microsoft will sustain the same kind of market share and pricing flexibility that it currently has in operating systems and productivity suites.
However, folks continue to lean on Microsoft as if there will be some kind of bottoming out process. That just doesn't happen when a model is in a gradual decline.
4. Merger-mania madness
Like the two last unattached barflies hooking up during the bartender's last call, everyone seems to be pairing up AOL
I think a combination makes sense, at least in terms of eliminating cost redundancies and growing more attractive to advertisers, but this week's rumor is just outrageous. As the yarn goes, private equity will take both companies private, then have AOL's Tim Armstrong take the helm of the combined company.
Really? I have nothing against Armstrong, but there are a few things that don't smell right:
- AOL commands a substantially lower market cap than Yahoo!, so why does AOL's leader get to run the show?
- How will anyone get Yahoo! to sign off on this?
- The first thing that private equity is likely to do is cash out of Yahoo!'s Asian investments to make back most of their investment. Bad move. It's one of the few things that Yahoo! has gotten right in recent years.
- Consolidation in the dot-com space will continue. This is not a good time for either AOL or Yahoo! to be taken private, when it's easier to strike deals armed with the cash and equity of a publicly trading company.
5. The sun also sets
If you want a more believable rumor to latch on to, there's always the old "Verizon iPhone" chatter.
The Wall Street Journal is at it again, this time declaring that the iPhone's exclusivity with AT&T
Burping back up an old rumor isn't smart -- but it isn't necessarily dumb. No, this nugget gets singled out because Verizon is the dummy if this is true.
If Verizon really will be selling the iPhone next year, it should be shouting it from the rooftops right now. Silence only means iPhone buyers shuffling off to AT&T. Announcing the availability in a matter of months, on the other hand, may be enough to get fans of Verizon's wireless service to hold off on becoming the next AT&T victims.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.
The Fool has a bull call spread position on Cisco Systems. Motley Fool Options has recommended a diagonal call position on Microsoft, which is a Motley Fool Inside Value recommendation. The Fool owns shares of Microsoft and Qualcomm. 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. 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.