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. Skype out
The market isn't warming up to Microsoft's
Is Mr. Softy overpaying for the popular voice and video chat platform? Will this anger wireless carriers supporting Windows Phone 7 if the incorporation of Skype eats into voice call charges? Was this a clever use of Microsoft's offshore greenery?
Those questions have been pondered to death this week. I'm just here to call out Microsoft and eBay
It was eBay that sold a 65% stake in Skype for $1.9 billion less than two years ago, implying a value of $2.75 billion for the fast-growing communications software. Yes, eBay was able to cash in on its 35% stake, but it left billions on the table by selling too soon.
And Microsoft? Where were you back in September 2009 when eBay couldn't get more than $3 billion for all of Skype?
2. The hardcore side of Sears
The American Family Association called out the iconic retailer after discovering that pornographic DVDs could be ordered by minors and others on Sears.com. Religious organizations on crusades often get cynical eyes a-rolling, but the AFA was spot-on here.
The videos violate Sears' merchandise standards, so the retailer has removed the salty titles that were being provided by a third party vendor.
Poor Sears. Even smut couldn't get shoppers excited.
3. Ring around the Rosie
Sirius XM Radio
Sirius XM will be airing "best of" segments during the summer and then rebroadcasting her new daily television show that will debut this fall on Oprah Winfrey's struggling OWN cable channel.
Whether you're a fan of O'Donnell, there's something not right about replacing exclusive content with reruns from a visual medium. I do find value as an investor in hearing CNBC as I drive around, but premium radio can do better than that. If Sirius XM wants to bump its monthly rates higher later this year, it will have to shell out more -- not less -- for fresh content.
4. It's a small, small world
It's true that Disney's
The family entertainment giant isn't broken. Yes, Mars Needs Moms was a flop, compared with last year's multiplex success of Alice in Wonderland. Disney's studio entertainment revenue will always be lumpy. However, if you back out the studio, Disney's revenue and segment operating income would have climbed a reasonable 10% and 11%, respectively.
Disney's stock still closed more than 5% lower on Wednesday after Tuesday night's report. Really? If the market is going to put so much weight in Disney's studio division, it bears pointing out that fresh installments in the Cars and Pirates of the Caribbean franchises are due out in the coming weeks.
5. The Cisco kids
The news doesn't get any better for Cisco
The fallen tech darling posted another uninspiring quarter, and CEO John Chambers is hosing down the future again. He concedes that the days of targeting 12% to 18% growth are toast. The networking gear market is too competitive, and Cisco has failed in trying to buy its way into headier growth.
Its heart is in the right place. It chose to tap a Juniper
Which of these five moves do you think is the dumbest? Share your thoughts in the comment box below.
Juniper Networks is a Motley Fool Big Short short-sale recommendation. Microsoft is a Motley Fool Inside Value choice. Walt Disney and eBay are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool has created a bull call spread position on Cisco Systems and owns shares of Microsoft. Alpha Newsletter Account, LLC has opened a short position on Juniper Networks and owns shares of Cisco Systems and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
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.