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. Flipping out
As bad as Cisco's
Cisco is killing the Flip camcorder, even though it shelled out $590 million a few years ago to acquire the parent company behind the once popular portable recorders. It's also integrating its wildly overpriced umi videoconferencing product line with its more successful enterprise equipment.
I knew that the umi was a dud from the start. Why didn't Cisco? I also knew that Flip's days were numbered two years ago, when even the tiny iPod nano added a video camera. Who wants a stand-alone camcorder when smartphones and MP3 players keep coming out with better and better cameras? Why didn't Cisco sell Flip then when it could have actually gotten some of its initial investment back?
2. I'll stop the world, Immelt with you
General Electric
Hot on the heels of last month's controversial eruption after it was revealed that the conglomerate scored a $3.2 billion tax refund despite posting a tidy profit, a bogus press release claimed that GE would be returning the $3.2 billion refund to the government.
The hoax was enough to sink the share price -- dropping GE's market cap by more than even the controversial refund at one point -- before raising suspicions on Wednesday morning.
3. Tablets get into the game
It's been four months since Orbitz Worldwide
AMR is filing a civil lawsuit against the travel portal to get its flight listings back on Orbitz.com, and ideally collecting some monetary damages along the way. Orbitz counters that the lawsuit is baseless because it was AMR that pulled its fares after the travel site refused to play by AMR's rules.
I'm no legal eagle. I don't play one on TV. What I do know is that AMR and Orbitz are companies that can't afford the distractions. They both struggle to remain consistently profitable. They aren't the investor darlings of their niches. More importantly, though, visitors to Orbitz.com being unable to compare existing fares with what American and American Eagle have going on hurts both the portal and the legacy carrier.
4. Best bye
You know it's a bad sign when your stock closes nearly 3% lower -- as Best Buy
If the struggling consumer electronics giant felt that Wall Street would be wowed by the retailer's goals of doubling online sales over the next few years, rolling out more stand-alone Best Buy Mobile stores as it shrinks its superstore base, and expanding its presence in China, it failed.
Stating the obvious isn't the same as having a realistic shot at getting there. Best Buy will struggle with online sales if it can't overcome the pricing advantage of lean Web-based merchants that don't have to charge state sales tax. Stand-alone wireless kiosks have no moats. China's booming, but it's a competitive marketplace for Best Buy's fledgling appliance store chain there.
Best Buy has the answers to questions that should have been asked several years earlier.
5. As my PC gently weeps
I guess we now know why Dell
Industry sales tracker IDC is reporting that global PC shipments fell 3.2% during the first three months of the year. It's the first year-over-year quarterly dip since the recent recession. Things get even hairier closer to home, as domestic shipments fell by a whopping 10.7% with Dell's units taking a nearly 12% hit.
There's been political upheaval in the Middle East and corporate hiring has been slow to come around, but even IDC concedes that the success of "good-enough computing" is eating into the sales of traditional desktops and laptops. After all, economic uncertainty hasn't stopped smartphones and tablets from exploding. They may never replace core computing functionality, but many consumers are realizing that they probably don't need PCs for their casual needs.
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.
