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. Poison is a bitter pill to swallow
You would think that bookworms know better.
A majority of Barnes & Noble
If Barnes & Noble investors want a potential acquirer to jump through hoops and also pay a healthy premium, they're dreaming. If shareowners believe that superstore chain will bounce back on its own, they're delusional.
There's a very good chance that B&N becomes the next Tower Records or Blockbuster, as the push for digital books begins to look a lot like the push for digital music and video that forced physical retailers into bankruptcy.
Yes, B&N is smart enough to have some skin in this game with its Nook, but it lacks the financial muscle of its competitors in this cutthroat field. Any reader of history should know that B&N's best hope is to cash out to even more out-of-touch private-equity firms -- and the sooner the better.
2. Bed intruders in Linkin Park
Speaking of industries fading out, Warner Music Group
WMG posted yet another loss in fiscal 2010. Revenue fell by 9% on a constant-currency basis, with a weak 7% gain in digital music sales losing the war as CD sales continue to plummet.
A couple of years ago, consolidation and cutting costs seemed to be the industry's response to a changing marketplace where labels aren't as relevant as the taste-makers they used to be. These days, even that isn't going to be enough to get WMG back in black.
3. Selective disclosure as a wardrobe malfunction
Another week, another public company with an inadvertent leak of its quarterly financials.
Just days after Disney
A Bloomberg reporter was able to unearth NetApp's fiscal second-quarter report -- unprotected on the company's website -- an hour before the numbers were officially revealed.
Disney's blunder didn't have much of an impact because it was a ho-hum quarter, but NetApp's results were disappointing, leading to a sell-off after Bloomberg's published report.
The sound you hear is turnover among the ranks of corporate communication employees at major corporations.
4. Make me trip
The hottest IPO in three years missed the runway in its first quarter as a public company, sending shares of MakeMyTrip
India's leading travel portal may have delivered revenue growth of 41%, but lousy margins led to a tiny adjusted profit. For whatever reason, India isn't ready to deliver the kind of dot-com boom that investors are experiencing in China now and in the United States several years ago.
MakeMyTrip sees revenue of $58 million to $61 million after service costs for fiscal 2011. How was it that this stock -- with a long history of losses and weak margins -- managed to be bid up to a market cap of $1.5 billion at its peak two months ago?
This week was a bumpy landing, but investors had no business with their heads in the clouds before.
5. Playing games in China
Not all online gaming stocks are the same in the world's most populous nation.
Shares of Perfect World
Perfect World's shortcomings became evident two days later, when NetEase.com
Investors can't simply buy second-tier companies in hot sectors and assume that they're nabbing speedsters. Perfect World was a rock star a year ago, but its financials were hopping off the industry's coattails well before this week's numbers. The strategy may work in a perfect world, but not with Perfect World.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.
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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 Disney. 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.