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. Your Best isn't good enough
Best Buy (NYSE:BBY) shares have more than doubled this year, and Tuesday's quarterly report would've been a great opportunity to show off why the stock deserves the helium.
Well, it wasn't pretty.
Revenue fell 10%. Adjusted earnings plunged 58%. Same-store sales were negative, and that's even with the benefit of padding as growing online sales are being divided into fewer brick-and-mortar superstores.
CEO Hubert Joly has done an admirable job of cutting costs and getting investors to buy into his turnaround strategy, but isn't it ironic that Best Buy flies in a new helmsman from France, and he proceeds to unload Best Buy's European operations?
Don't expect to find the new vanilla-flavored carbonated beverage at a store near you. The flavor will only be available at the park.
There's nothing "dumb" about this so far, but then we get to Coca-Cola playing the environmental card. Vanilla South Pole Chill will be available in refillable penguin character cups. Purchases of the "Cup That Cares" will have $1 donated to the marine park's not-for-profit conservation fund.
So far, so cool. The hypocrisy is starting to pour in, but that would be fine if it ended there.
There's an RFID chip in the cup that measures the carbon dioxide being spared whenever the refillable cup is used. Coca-Cola and SeaWorld estimate that 27 grams of CO2 are saved this way. Wait a minute! Doesn't this send a negative message about all of the Coca-Cola cans and bottles that are presently being consumed and tossed into landfills?
There's nothing necessarily wrong with the message, but the messenger's a bit of a hypocrite.
3. Sears for fears
Sears Holdings (OTC:SHLDQ) continues its downward spiral.
The company behind the moribund Sears and Kmart department store chains posted a larger quarterly deficit than Wall Street was expecting. Domestic same-store sales continue to fall, off another 3.6% at both chains this time around.
"A company of our size and with our assets should be generating a significant profit," CEO Eddie Lampert says during the earnings call.
Really? Maybe if the fading retailer would've invested in updating its stores several years ago it wouldn't be in this predicament.
It's too late now. Debt is growing. Cash reserves are drying. Lampert promises potential asset sales and a real-estate-based transaction, but if Lampert never invested the necessary sums to make the tired concepts exciting to shoppers before, it's unlikely that he'll commit to the long-overdue improvements now.
4. Carnival freak show
Carnival (NYSE:CCL) isn't doing so well. Is anyone surprised?
It's been a rough run at the world's largest cruise line lately. Catastrophic capsizing and stalling incidents have given Carnival and its fleet a bad name in the industry, and now the company is forced into discounting to fill up cabins.
Carnival now expects to earn $1.45 to $1.65 a share this year. Its earlier guidance called for as much as $2.10 a share in profitability.
Net revenue yields are coming in worse than the flat outlook that it had issued earlier this year. It takes a lot of promotion and pride-swallowing fare cuts to fill up its many berths.
The rest of the industry appears to be largely unscathed for now. They're all coasting along near fresh highs. It remains to be seen when Carnival will be able to win back its reputation.
5. TiVo needs to take boxing lessons
TiVo (NASDAQ:TIVO) showed strong subscriber growth in its latest quarter, but that's coming entirely from technology licensing deals with cable and satellite television giants.
The number of owned subs -- the number of people who own actual TiVo boxes -- has fallen to 1,007,000. We're talking about 22,000 fewer than the DVR pioneer had three months ago and 73,000 fewer than it had a year earlier. Making matters worse, nearly half of those million accounts aren't generating any recurring revenue since they purchased lifetime subscriptions several years ago.
Indirect subs may have exploded from 1.4 million to 2.4 million, but TiVo gets just $1.19 per month from those customers. TiVo-owned subscribers are shelling out an average of $8.51 a month.
Yes, TiVo is trending toward dropping below a million owned subs this quarter. Ouch.