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. Zynga plays words with ends
Zynga (ZNGA +0.00%) is killing off more of its games.
PetVille and Mafia Wars 2 became the latest casualties for the social gaming leader. Both of those games were shut down on Sunday. It's been a cold December, as Zynga has now nixed 10 of its online diversions.
No company is under an obligation to keep unpopular games going, but keep in mind that folks invest time and in some instances money to participate in these virtual worlds. Do you think any of these players will trust anything else that Zynga puts out?
Even the larger CityVille and FarmVille 2 audiences need to be concerned. Who knows when it will be their worlds that Zynga decides to wipe out in its next round of virtual genocide? Yes, genocide is perhaps too strong a word here, but Zynga's reputation won't be the same after wiping its slate clean of so many games that still mattered to some players. If it's not a cautionary tale for the next time that Zynga wants you to share an achievement with friends or pay up for virtual goodies, you're missing the point.
2. You can be bad to Baidu, but do so for good reasons
Credit Suisse analyst Wallace Cheung is slashing his price target on Baidu (BIDU +4.56%).
Bears will be bears, and reiterating his underperform rating -- and slashing his share target from $82 to $80 -- isn't dumb in and of itself.
However, Cheung is lowering his price target based partly on the logic that Baidu will use some of its recently raised capital on acquisitions.
Really? A week ago, a Chinese company was acquired at a better than 100% premium -- and the acquirer's stock went up. China is cheap, and now is clearly a time to go shopping.
Cheung lists Kingsoft and UCweb -- two leading players in online security and mobile browsers, respectively -- as strong buyout candidates for Baidu. How is this bad? This happens to be the turf of the company that rolled out a rival search engine this past summer that has forced investors to question Baidu's growth prospects. Attacking those arenas seems like a smart response, if that's where Baidu chooses to go with its money.
Downgrading Baidu's value based on incremental opportunities doesn't make sense.
3. Mellow Yellow
The market soared on Wednesday after the fiscal cliff was temporarily averted, but at least one company bucked the trend with lousy timing on bad news.
Server connectivity specialist Mellanox Technologies (MLNX +0.00%) took a hit after hosing down its quarterly revenue target.
It wasn't even close, as the $119 million to $121 million that Mellanox is now projecting is well short of its earlier forecast calling for as much as $150 million in revenue.
Weak demand and a technical cabling issue that has since been resolved weighed on results.
4.Seeing red over Redbox
Coinstar (CSTR +0.00%) shares fell on Thursday after the company revealed that its CEO will retire at the end of the quarter.
Investors hate to see CEOs retire, especially 55-year-old helmsmen.
However, this makes the cut this week because he plans to step down just as the company is rolling out its long-promised and oft-delayed digital service to the public this quarter. One would think that this would be a pivotal event where stability at the top is required.
The one knock on Coinstar now that Redbox makes up the lion's share of its revenue is that it's at the mercy of the DVD as a dying medium. Now it has a potential response, but the CEO won't be around to see it through.
5. Please clean room now
Apple (AAPL +0.30%) apparently didn't want iPhone owners to be jarred into 2013. A reported bug in the company's latest iOS 6 update didn't take the device off "Do Not Disturb" mode on Jan. 1 at the time specified by the owner. In other words, the phone stayed in silent mode until owners realized what was happening and manually undid the "Do Not Disturb" mode.
This probably wouldn't be such a big deal, but the timing is unfortunate. Apple just happened to roll out a new iPhone commercial this week promoting this very feature. In the spot, the protagonist beats Venus and Serena Williams in a ping-pong match during a dream. He was able to go into a deep sleep, apparently, because he had set the "Do Not Disturb" mode on his iPhone.
Well, I guess Apple let us all dream a little longer on Tuesday morning.
