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. It's BlackBerry picking season again
Research In Motion
It doesn't really matter. RIM never had access to the BBX name. It was trademarked by a smaller software company. It is certainly commendable that BlackBerry decided to cut bait early. The last thing it needs is to be seen as a courtroom bully if it wins or a loser if it comes up short. However, the hapless smartphone pioneer makes the cut this week because it went this far before realizing that the trademark issue would be a problem.
2. Win, uDraw, or draw
uDraw is a $50 console accessory that consists of a tablet and attached stylus. Pictionary and other drawing games are available, giving THQ an attractive ecosystem where initial hardware sales lead to future software purchases. It was a hit on the Wii last year, selling 1.2 million copies during last year's holiday quarter. That makes sense. Wii gamers tend to be young families that favor interactive gameplay over hardcore specs.
But why did THQ believe that a Wii hit would fly with PS3 and Xbox die-hard gamers? Unless these tablets could be used to hurl grenades or conquer kingdoms, older gamers have no reason to warm up to uDraw.
It's a conclusion that you can draw yourself.
3. Party out of bounds
However, we can't assume that every update is an upgrade. Scrolling through most of the more than 160 comments posted by Netflix users on the official blog finds an overwhelming consensus that the new Xbox update is a major step back. Buggy controls, illogical features, and the removal of a "party" feature that allowed Xbox users to watch the same video simultaneously with their friends appear to be the biggest knocks.
"You are like the Cleveland Browns of the media streaming services," writes one angry customer.
I disagree. Netflix is more like the Indianapolis Colts. It was great through last year. It can't win in 2011. Everyone's holding out for better Luck next year.
4. Can you stream me now?
Sources are telling Reuters that Verizon will roll out a stand-alone digital video subscription service next year. Things got a bit more interesting when a source told TechCrunch that Verizon is actually partnering with Coinstar's
Redbox has been promising a digital strategy since early last year, so the rumor does make sense. Between Verizon's pole position in wireless phones and Redbox's dominance in cheap DVD rentals, the two companies working together makes far more sense than either one working alone. However, Netflix is having a hard time growing its audience of couch potatoes now that it's charging all streaming customers $7.99 a month. How is an upstart expected to compete when it will take years to build up a Netflix-like digital catalog at a competitive price point?
5. Tesla recoils
A Morgan Stanley analyst is dramatically downgrading shares of Tesla Motors
Knocking down his price target from $70 to $44, the analyst feels that electric vehicle market penetration will only check in at 4.5% by 2025, well off his earlier target of 8.6%.
Is this really the right call? I am starting to see charging stations show up in some unexpected places, and Tesla's more attractively priced sedan hits the market next year.
Demand for electric cars and hybrids has been a challenge in this soft economy. General Motors
If you want to track these companies to make sure that they don't make another dumb mistake soon, consider adding them to My Watchlist.
Motley Fool newsletter services have recommended buying shares of Netflix, General Motors, Tesla Motors, and Coinstar. 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. The Motley Fool has a disclosure policy.
Longtime Fool contributor Rick Munarriz calls them as he sees them. 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.